Parsons Corp (PSN)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	272,943	262,539	342,608	483,609	182,688
Short-term investments	US$ in thousands	—	—	1,275	3,606	12,686
Total current liabilities	US$ in thousands	1,410,880	1,108,120	1,030,780	1,187,410	1,144,380
Cash ratio		0.19	0.24	0.33	0.41	0.17

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($272,943K + $—K) ÷ $1,410,880K
= 0.19

The cash ratio of Parsons Corp has fluctuated over the past five years, ranging from 0.17 to 0.41. This ratio indicates the company's ability to cover its short-term obligations with its available cash and cash equivalents. A higher cash ratio implies a stronger liquidity position, as more cash is available to meet immediate financial obligations.

The decreasing trend from 0.41 in 2020 to 0.19 in 2023 may suggest a potential liquidity concern or a shift in the company's cash management strategy. It is important to further analyze the company's cash management practices and overall financial health to understand the factors contributing to these fluctuations. Additionally, a low cash ratio may indicate a reliance on other sources of liquidity, such as short-term borrowing or liquidating other assets, which could pose risks during financial distress or economic downturns.

Overall, the fluctuating cash ratio of Parsons Corp highlights the importance of closely monitoring liquidity levels and cash management practices to ensure the company can meet its short-term obligations effectively.