Packaging Corp of America (PKG)
Cash ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 685,000 | 648,000 | 320,000 | 618,700 | 974,600 |
| Short-term investments | US$ in thousands | 102,000 | 493,500 | 85,200 | 86,100 | 105,600 |
| Total current liabilities | US$ in thousands | 1,001,600 | 1,265,700 | 875,500 | 884,800 | 782,600 |
| Cash ratio | 0.79 | 0.90 | 0.46 | 0.80 | 1.38 |
December 31, 2024 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($685,000K
+ $102,000K)
÷ $1,001,600K
= 0.79
The cash ratio of Packaging Corp of America has fluctuated over the years, indicating changes in the company's ability to cover its short-term liabilities with cash and cash equivalents. In 2020, the ratio was 1.38, suggesting the company held more than enough cash to meet its immediate obligations. However, by the end of 2022, the ratio had decreased to 0.46, indicating a potential liquidity concern as the company may have had insufficient cash to cover short-term liabilities.
The ratio improved in 2023 to 0.90, signaling a better position in terms of liquidity compared to the previous year. However, by the end of 2024, the ratio dropped slightly to 0.79, indicating a decrease in the company's ability to cover short-term liabilities with its available cash.
Overall, while the cash ratio of Packaging Corp of America has fluctuated, it is essential for the company to maintain a healthy level of cash reserves to ensure it can meet its short-term obligations effectively. Management should monitor this ratio closely to assess the company's liquidity position and make appropriate financial decisions.
Peer comparison
Dec 31, 2024