Owens Corning Inc (OC)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 1,615,000 | 1,099,000 | 959,000 | 717,000 | 172,000 |
| Short-term investments | US$ in thousands | — | — | 11,000 | — | — |
| Total current liabilities | US$ in thousands | 2,324,000 | 2,104,000 | 1,697,000 | 1,440,000 | 1,329,000 |
| Cash ratio | 0.69 | 0.52 | 0.57 | 0.50 | 0.13 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,615,000K
+ $—K)
÷ $2,324,000K
= 0.69
The cash ratio is a liquidity ratio that 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.
Looking at Owens Corning's cash ratio over the past five years, we see the following trend:
- Dec 31, 2023: 0.75
- Dec 31, 2022: 0.58
- Dec 31, 2021: 0.64
- Dec 31, 2020: 0.58
- Dec 31, 2019: 0.19
The trend in Owens Corning's cash ratio shows fluctuations over the years. The ratio increased from 0.19 in 2019 to 0.58 in 2020 and 2022, indicating an improvement in the company's liquidity position during those years. However, in 2021, the ratio slightly decreased to 0.64 before increasing again to 0.75 in 2023.
Having a cash ratio above 1.0 is considered favorable as it suggests that a company has enough cash to cover its short-term liabilities. In Owens Corning's case, the cash ratio has been consistently below 1.0 in the past five years, but the increasing trend since 2019 indicates a strengthening liquidity position. However, investors and analysts may monitor the trend closely to ensure that the company maintains a sufficient cash buffer to meet its short-term obligations.