Photronics Inc (PLAB)

Cash ratio

		Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019
Cash and cash equivalents	US$ in thousands	499,292	319,680	276,670	278,665	206,530
Short-term investments	US$ in thousands	12,915	38,820	0	—	—
Total current liabilities	US$ in thousands	185,223	193,797	176,148	142,939	151,954
Cash ratio		2.77	1.85	1.57	1.95	1.36

October 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($499,292K + $12,915K) ÷ $185,223K
= 2.77

The cash ratio is a liquidity ratio that measures a company's ability to pay off its short-term liabilities using its cash and cash equivalents. It is calculated by dividing the company's cash and cash equivalents by its current liabilities. A higher cash ratio indicates a stronger ability to cover short-term obligations with cash on hand.

Let's analyze the trend in Photronics, Inc.'s cash ratio over the past five years:

1. Oct 31, 2023: The cash ratio is 2.92, indicating that the company has significantly increased its ability to cover short-term liabilities with its cash and cash equivalents compared to the previous year.

2. Oct 31, 2022: The cash ratio was 2.04, showing a positive improvement from the prior year. It indicates that the company's cash position improved, strengthening its ability to meet short-term obligations.

3. Oct 31, 2021: The cash ratio stood at 1.82, indicating a slight decline compared to the previous year. While the ratio is still relatively healthy, the decrease suggests that the company's ability to cover short-term liabilities with cash diminished slightly.

4. Oct 31, 2020: The cash ratio increased to 2.16, signifying an improvement in the company's liquidity position compared to the prior year. This suggests that Photronics, Inc. was more capable of meeting its short-term obligations with its available cash and cash equivalents.

5. Oct 31, 2019: The cash ratio was 1.61, indicating a lower ability to cover short-term liabilities with cash when compared to later years.

In summary, the trend in Photronics, Inc.'s cash ratio has shown fluctuations over the past five years, with periods of improvement and slight declines. Overall, the company has maintained a strong ability to cover its short-term liabilities with its cash and cash equivalents, with the ratio consistently above 1. However, the increase in the cash ratio in 2023 suggests a significant enhancement in the company's liquidity position compared to the previous year.