Meta Platforms Inc. (META)

Cash ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash and cash equivalents US$ in thousands 43,889,000 41,862,000 14,681,000 16,601,000 17,576,000
Short-term investments US$ in thousands 35,152,000 23,541,000 26,082,000 31,397,000 44,378,000
Total current liabilities US$ in thousands 33,596,000 31,960,000 27,026,000 21,135,000 14,981,000
Cash ratio 2.35 2.05 1.51 2.27 4.14

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($43,889,000K + $35,152,000K) ÷ $33,596,000K
= 2.35

Based on the data provided, Meta Platforms Inc.'s cash ratio has decreased over the past five years. The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents.

In December 31, 2020, the cash ratio was at a relatively high level of 4.14, indicating that Meta Platforms had a strong ability to cover its short-term obligations with its available cash. However, over the subsequent years, the cash ratio declined, reaching its lowest point of 1.51 on December 31, 2022. This suggests a decrease in the company's liquidity position during that period.

Although there was a slight improvement in the cash ratio in the following years, it remained below the initial level. As of December 31, 2024, the cash ratio stood at 2.35, signifying that Meta Platforms had improved its ability to cover short-term liabilities compared to 2022, but still not as strong as it was in 2020.

Overall, the declining trend in Meta Platforms' cash ratio indicates a potential reduction in the company's short-term liquidity over the years, which may be a point of concern for investors and creditors monitoring the company's financial health. Management may need to closely monitor and manage the company's cash position to ensure it maintains a healthy liquidity position in the future.

See also:

Meta Platforms Inc. Cash Ratio