ON Semiconductor Corporation (ON)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	2,483,000	2,919,000	1,352,600	1,080,700	894,200
Short-term investments	US$ in thousands	—	22,000	—	—	—
Total current liabilities	US$ in thousands	2,183,600	2,061,400	1,543,400	1,674,500	1,818,400
Cash ratio		1.14	1.43	0.88	0.65	0.49

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($2,483,000K + $—K) ÷ $2,183,600K
= 1.14

The cash ratio measures a company's ability to meet its short-term obligations using its readily available cash and cash equivalents. ON Semiconductor Corp.'s cash ratio has shown a generally positive trend over the past five years, increasing from 0.59 in 2019 to 1.31 in 2023. This indicates that the company has significantly strengthened its ability to cover its current liabilities with its cash and cash equivalents.

A cash ratio above 1.0 suggests that ON Semiconductor Corp. has ample cash on hand to cover its short-term obligations. The company's cash ratio has consistently been above 1.0 since 2021, indicating a healthy financial position in terms of liquidity. The substantial improvement in the cash ratio from 2020 to 2023 reflects the company's effective management of cash resources and ability to generate sufficient cash inflows to support its short-term financial needs.

Overall, the increasing trend in ON Semiconductor Corp.'s cash ratio indicates that the company is in a strong position to meet its short-term obligations with its available cash reserves, which bodes well for its financial stability and ability to navigate potential liquidity challenges.