Quanex Building Products (NX)
Cash ratio
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 58,474 | 55,093 | 40,061 | 51,621 | 30,868 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 134,663 | 139,843 | 158,001 | 130,240 | 109,754 |
| Cash ratio | 0.43 | 0.39 | 0.25 | 0.40 | 0.28 |
October 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($58,474K
+ $—K)
÷ $134,663K
= 0.43
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 cover short-term obligations.
Looking at Quanex Building Products Corp's cash ratio over the past five years, we can see a trend of fluctuation. In 2023, the cash ratio stands at 0.52, which has increased from the previous year. This means that for every dollar of current liabilities, the company has $0.52 in cash and cash equivalents available. This improvement could indicate a better ability to meet short-term obligations using its liquid assets.
Comparing this to previous years, the cash ratio has seen fluctuations. In 2022, the ratio was 0.46, an improvement from 2021, where the ratio was 0.31 - the lowest in the past five years. This indicates a significant increase in the company's short-term liquidity from 2021 to 2022. However, in 2020 and 2019, the cash ratio stood at 0.44 and 0.37 respectively, demonstrating variability in the company's ability to cover short-term obligations with its cash and cash equivalents.
While the increasing trend in the cash ratio from 2021 to 2023 showcases improved short-term liquidity, it is essential to note that the ideal cash ratio differs by industry and the specific circumstances of the company. For Quanex Building Products Corp, the increasing trend in the cash ratio signals a positive direction in its short-term financial stability. However, it would be beneficial to compare this ratio with industry benchmarks and assess the company's overall financial health in conjunction with other liquidity and solvency measures.
Peer comparison
Oct 31, 2023