Monolithic Power Systems Inc (MPWR)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	691,816	527,843	288,607	189,265	334,944
Short-term investments	US$ in thousands	171,130	580,633	449,266	535,817	260,169
Total current liabilities	US$ in thousands	294,567	235,035	263,400	226,944	146,969
Cash ratio		2.93	4.72	2.80	3.19	4.05

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($691,816K + $171,130K) ÷ $294,567K
= 2.93

The cash ratio of Monolithic Power Systems Inc has exhibited some fluctuations over the past five years. In December 31, 2020, the cash ratio was at 4.05, indicating that the company had $4.05 in cash and cash equivalents for every dollar of current liabilities. Subsequently, the ratio decreased to 3.19 by December 31, 2021, and further declined to 2.80 by December 31, 2022.

However, the cash ratio saw a significant improvement by December 31, 2023, reaching 4.72, suggesting a strengthened liquidity position with $4.72 in cash and cash equivalents available for each dollar of current liabilities. Nonetheless, by December 31, 2024, the ratio dipped slightly to 2.93.

Overall, while the company experienced fluctuations in its cash ratio, it is crucial to assess the trend over time to understand the effectiveness of Monolithic Power Systems Inc in managing its short-term liquidity and ability to meet its current obligations with available cash resources.