MillerKnoll Inc (MLKN)
Cash ratio
| Jun 3, 2023 | May 28, 2022 | May 29, 2021 | May 30, 2020 | Jun 1, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 223,500 | 230,300 | 396,400 | 454,000 | 159,200 |
| Short-term investments | US$ in thousands | — | 7,700 | 7,700 | 7,000 | 8,800 |
| Total current liabilities | US$ in thousands | 702,800 | 877,400 | 476,500 | 470,200 | 446,100 |
| Cash ratio | 0.32 | 0.27 | 0.85 | 0.98 | 0.38 |
June 3, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($223,500K
+ $—K)
÷ $702,800K
= 0.32
The cash ratio is a liquidity ratio that measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio indicates a greater ability to cover short-term liabilities.
Looking at the historical cash ratio of MillerKnoll Inc, we observe a downward trend over the past five years. In Jun 3, 2023, the cash ratio stands at 0.46, which implies that the company has $0.46 in cash and cash equivalents for every $1 of current liabilities. Comparing this to the previous years, there has been a decline in the cash ratio from 0.40 in May 28, 2022, 0.91 in May 29, 2021, 1.01 in May 30, 2020, to 0.50 in Jun 1, 2019.
The declining trend in the cash ratio raises concerns about the company's liquidity position. A low cash ratio could suggest that MillerKnoll Inc may face challenges in meeting its short-term obligations with its current level of cash and cash equivalents. This may lead to difficulties in funding day-to-day operations, paying off creditors, and taking advantage of potential investment opportunities.
It's important for the company to closely monitor its liquidity position and consider strategies to improve its cash reserves. This could involve optimizing cash management processes, improving efficiency in collections and payments, or exploring opportunities to generate more cash inflows.
Overall, the declining trend in MillerKnoll Inc's cash ratio over the past five years highlights the importance of maintaining a strong liquidity position to ensure ongoing financial stability and minimize the risk of cash flow shortages.