Keysight Technologies Inc (KEYS)

Cash ratio

		Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019
Cash and cash equivalents	US$ in thousands	2,472,000	2,042,000	2,052,000	1,756,000	1,598,000
Short-term investments	US$ in thousands	—	—	—	52,000	37,000
Total current liabilities	US$ in thousands	2,049,000	1,407,000	1,309,000	1,081,000	1,003,000
Cash ratio		1.21	1.45	1.57	1.67	1.63

October 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($2,472,000K + $—K) ÷ $2,049,000K
= 1.21

The cash ratio measures a company's ability to pay off its short-term liabilities using only its cash and cash equivalents. It is a more conservative liquidity measure than the current ratio, as it excludes current assets such as inventory and accounts receivable that may not be readily convertible to cash.

Keysight Technologies Inc's cash ratio has shown a slight decline over the past 5 years, decreasing from 1.84 in 2019 to 1.43 in 2023. This suggests a potential reduction in the company's ability to cover its short-term obligations solely with its cash and cash equivalents.

A cash ratio of 1.43 in 2023 indicates that for every dollar of current liabilities, Keysight Technologies Inc has $1.43 in cash and cash equivalents available to meet those obligations. While this ratio is above 1, indicating the company has sufficient cash to cover its short-term liabilities, the decreasing trend over the years should be noted.

It's essential to consider the reasons behind the decline in the cash ratio. It could be a result of increased short-term liabilities, decreased cash and cash equivalents, or both. Furthermore, understanding the company's cash management and liquidity strategies, as well as the industry and economic factors impacting the business, would provide a more comprehensive analysis of this trend.

In conclusion, while Keysight Technologies Inc maintains a cash ratio above 1, indicating short-term liquidity strength, the declining trend in the ratio should be carefully monitored to ensure the company's ability to meet its short-term obligations in the future.