Otter Tail Corporation (OTTR)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	230,373	118,996	1,537	1,163	21,199
Short-term investments	US$ in thousands	7,771	5,503	5,432	1,662	1,586
Total current liabilities	US$ in thousands	309,757	237,636	387,699	436,786	189,741
Cash ratio		0.77	0.52	0.02	0.01	0.12

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($230,373K + $7,771K) ÷ $309,757K
= 0.77

The cash ratio of Otter Tail Corporation has exhibited significant fluctuations over the past five years. In 2023, the company's cash ratio improved to 0.85, indicating that it had $0.85 of cash and cash equivalents for every $1 of current liabilities. This represents a healthy increase from the previous year's ratio of 0.68.

The substantial improvement in the cash ratio from 2022 to 2023 suggests that Otter Tail Corporation has enhanced its liquidity position, potentially by increasing its cash reserves or reducing its short-term obligations.

Comparing the current ratio to earlier years, we observe a remarkable increase from 0.07 in 2020 to 0.85 in 2023, signifying a significant enhancement in the company's ability to cover its short-term obligations with available cash.

It is essential for investors and stakeholders to monitor Otter Tail Corporation's cash ratio closely as it reflects the company's ability to meet its immediate financial obligations using its cash and cash equivalents. The company's increasing cash ratio over the years indicates a positive trend in its liquidity management.