Power Integrations Inc (POWI)

Cash ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash and cash equivalents US$ in thousands 50,972 63,929 105,372 158,117 258,874
Short-term investments US$ in thousands 249,023 247,640 248,441 372,235 190,318
Total current liabilities US$ in thousands 55,317 48,867 58,376 72,321 62,526
Cash ratio 5.42 6.38 6.06 7.33 7.18

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($50,972K + $249,023K) ÷ $55,317K
= 5.42

The cash ratio of Power Integrations Inc has shown a relatively stable trend over the years, ranging from a high of 7.33 in December 31, 2021, to a low of 5.42 in December 31, 2024. This ratio indicates the company's ability to cover its short-term liabilities with cash and cash equivalents.

Although the cash ratio has fluctuated slightly, it generally remains above 1, which suggests that the company has sufficient liquid assets to meet its short-term obligations. A higher cash ratio indicates a stronger liquidity position, providing a buffer against unexpected financial challenges.

However, the decrease in the cash ratio from 2021 to 2024 may indicate a decreasing ability to cover short-term liabilities solely with cash reserves. It is important for the company to continue monitoring its liquidity position and managing cash effectively to ensure financial stability in the future.