Planet Fitness Inc (PLNT)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 275,842 | 409,840 | 545,909 | 439,478 | 436,256 |
| Short-term investments | US$ in thousands | 204,447 | 0 | — | — | — |
| Total current liabilities | US$ in thousands | 251,329 | 244,530 | 176,610 | 111,895 | 145,478 |
| Cash ratio | 1.91 | 1.68 | 3.09 | 3.93 | 3.00 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($275,842K
+ $204,447K)
÷ $251,329K
= 1.91
The cash ratio of Planet Fitness Inc has shown a declining trend from 2019 to 2023. The cash ratio was 3.05 in 2019, indicating that the company had $3.05 in cash and cash equivalents available for every $1 of current liabilities. However, this ratio decreased to 1.45 in 2023, reflecting that the company's liquidity position has weakened over the years.
A cash ratio below 1 suggests that a company may have difficulty meeting its short-term obligations with its available cash and cash equivalents alone. In this case, Planet Fitness Inc's cash ratio has been consistently above 1 in all years, indicating that the company has had sufficient liquid assets to cover its short-term liabilities.
While the declining trend in the cash ratio may raise some concerns about the company's ability to meet its short-term obligations with cash on hand, it is essential to consider other liquidity ratios and factors in conjunction with the cash ratio to obtain a comprehensive understanding of Planet Fitness Inc's overall liquidity position.