Ormat Technologies Inc (ORA)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	195,808	95,872	239,278	448,252	71,173
Short-term investments	US$ in thousands	—	—	43,343	98,217	—
Total current liabilities	US$ in thousands	537,012	343,910	544,156	248,647	376,476
Cash ratio		0.36	0.28	0.52	2.20	0.19

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($195,808K + $—K) ÷ $537,012K
= 0.36

The cash ratio of Ormat Technologies Inc has shown fluctuations over the past five years. In 2023, the cash ratio stood at 0.44, indicating that the company had $0.44 in cash and cash equivalents for every $1 of current liabilities. This ratio has increased from 2022 when it was 0.36 but is lower compared to 2021 when it was 0.59. The significant decrease in the cash ratio from 2021 to 2022 suggests that the company may have had less liquidity to cover its short-term obligations.

The sharp increase in the cash ratio in 2020 to 1.86 indicates a substantial improvement in Ormat Technologies Inc's liquidity position, with the company holding $1.86 in cash and cash equivalents for every $1 of current liabilities. However, this high ratio may also indicate that the company was holding excess cash that could have been invested more productively elsewhere. The cash ratio then dropped in 2019 to 0.22, signifying a lower level of liquidity compared to the other years.

Overall, Ormat Technologies Inc's cash ratio has been volatile over the years, indicating fluctuations in the company's ability to meet its short-term obligations solely with cash and cash equivalents. It is essential for the company to strike a balance between holding sufficient cash for liquidity needs and utilizing excess cash effectively to maximize shareholder value.