Perrigo Company PLC (PRGO)

Cash ratio

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Cash and cash equivalents US$ in thousands 751,300 600,700 1,864,900 631,500 354,300
Short-term investments US$ in thousands 100 100 400 10,000 6,600
Total current liabilities US$ in thousands 1,586,300 1,113,600 1,587,900 1,382,000 1,335,800
Cash ratio 0.47 0.54 1.17 0.46 0.27

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($751,300K + $100K) ÷ $1,586,300K
= 0.47

The cash ratio of Perrigo Company plc has shown fluctuations over the past five years, ranging from 0.41 to 1.37. The ratio indicates the company's ability to cover its short-term liabilities with its cash and cash equivalents. In 2021, the ratio peaked at 1.37, suggesting a strong liquidity position, which could be attributed to higher cash reserves relative to current liabilities. However, in 2019, the cash ratio was the lowest at 0.41, indicating a lower ability to cover short-term obligations with available cash. The declining trend observed in 2020 and 2023, where the ratio dropped to 0.64 and 0.60, respectively, may raise concerns about liquidity management. Overall, a cash ratio above 1 is considered favorable as it indicates that the company can fully cover its short-term liabilities with cash on hand. Monitoring this ratio over time can provide insights into Perrigo Company plc's liquidity position and its ability to meet its financial obligations.