ON Semiconductor Corporation (ON)

Cash ratio

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Cash and cash equivalents	US$ in thousands	2,691,300	2,470,200	2,231,000	2,614,400	2,483,000	2,679,200	2,622,200	2,702,400	2,919,000	2,450,200	1,791,600	1,645,100	1,352,600	1,389,200	1,091,100	1,042,500	1,080,700	1,654,000	2,060,400	1,982,000
Short-term investments	US$ in thousands	300,000	300,000	450,000	—	0	—	12,500	21,800	22,000	34,100	34,800	32,800	—	20,000	—	—	—	—	—	—
Total current liabilities	US$ in thousands	1,334,800	2,128,600	2,098,000	2,139,000	2,183,600	2,494,800	2,480,700	2,580,000	2,061,400	1,761,000	1,713,300	1,566,100	1,543,400	1,444,100	1,455,100	1,730,000	1,674,500	1,803,100	1,764,600	1,736,100
Cash ratio		2.24	1.30	1.28	1.22	1.14	1.07	1.06	1.06	1.43	1.41	1.07	1.07	0.88	0.98	0.75	0.60	0.65	0.92	1.17	1.14

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($2,691,300K + $300,000K) ÷ $1,334,800K
= 2.24

The cash ratio of ON Semiconductor Corporation has exhibited fluctuations over the past few years, providing insights into the company's liquidity position. The cash ratio, calculated as the ratio of cash and cash equivalents to current liabilities, measures the firm's ability to cover its short-term obligations with readily available cash.

From the data provided, we observe that the cash ratio ranged from a low of 0.60 on March 31, 2021, to a high of 2.24 on December 31, 2024. Generally, a cash ratio above 1 indicates that a company has sufficient cash to cover its current liabilities, which suggests a strong liquidity position.

The trend in ON Semiconductor Corporation's cash ratio shows an improvement over the period under review, with notable increases from September 30, 2021, onwards. This improvement indicates a strengthened ability to meet short-term obligations and suggests prudent financial management.

It is important to note that while a high cash ratio signifies strong liquidity, excessively high levels of cash relative to liabilities may indicate underutilization of resources. Therefore, management should strike a balance between liquidity and profitability to maximize shareholder value and ensure efficient operations.