Kontoor Brands Inc (KTB)

Cash ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash and cash equivalents US$ in thousands 334,066 215,050 59,179 185,322 248,138
Short-term investments US$ in thousands — — — — —
Total current liabilities US$ in thousands 393,905 392,637 440,429 455,812 413,635
Cash ratio 0.85 0.55 0.13 0.41 0.60

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($334,066K + $—K) ÷ $393,905K
= 0.85

The cash ratio measures a company's ability to cover its short-term liabilities with its available cash and cash equivalents. A higher cash ratio indicates a stronger ability to meet short-term obligations without relying on external sources.

Analyzing Kontoor Brands Inc's cash ratio over the past five years, we can see fluctuations in the company's liquidity position.

- In December 2020, the cash ratio was 0.60, reflecting that the company had $0.60 of cash and cash equivalents for every dollar of current liabilities. This indicates a reasonable liquidity position.

- By December 2021, the cash ratio declined to 0.41, showing a decrease in the company's ability to cover short-term obligations with cash on hand.

- The cash ratio further decreased to 0.13 by December 2022, indicating a significant decline in liquidity. This could raise concerns about the company's ability to meet short-term obligations solely from its available cash reserves.

- However, by December 2023, the cash ratio improved to 0.55, suggesting a partial recovery in liquidity.

- Finally, by December 2024, the cash ratio increased substantially to 0.85, indicating a significant improvement in Kontoor Brands Inc's ability to cover short-term liabilities with its cash resources.

Overall, Kontoor Brands Inc's cash ratio has shown fluctuations over the past five years, with periods of both strength and weakness in its liquidity position. It is crucial for investors and stakeholders to monitor these trends to assess the company's ability to meet its short-term financial obligations.