Phillips 66 (PSX)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	1,738,000	3,323,000	6,133,000	3,147,000	2,514,000
Short-term investments	US$ in thousands	—	—	329,000	—	13,624,000
Total current liabilities	US$ in thousands	15,087,000	15,856,000	15,889,000	12,801,000	9,518,000
Cash ratio		0.12	0.21	0.41	0.25	1.70

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,738,000K + $—K) ÷ $15,087,000K
= 0.12

The cash ratio of Phillips 66 has shown some fluctuations over the last five years. In December 2020, the cash ratio was 1.70, indicating that the company had $1.70 in cash and cash equivalents for every $1 of current liabilities. However, by December 2021, the cash ratio had decreased significantly to 0.25, suggesting a lower ability to cover immediate liabilities with cash on hand.

In the following years, the cash ratio improved slightly to 0.41 in December 2022, but then dropped again to 0.21 in December 2023, signaling a continued challenge in maintaining liquid assets relative to short-term obligations. By December 2024, the cash ratio further declined to 0.12, indicating a more precarious position in terms of liquidity.

Overall, the decreasing trend in the cash ratio over the years raises concerns about Phillips 66's ability to meet its short-term financial obligations solely with its available cash reserves. It may indicate a need for the company to closely monitor its liquidity position and potentially implement strategies to improve its cash management practices.