RXO Inc. (RXO)

Cash ratio

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023
Cash and cash equivalents	US$ in thousands	5,000	104,000	124,000
Short-term investments	US$ in thousands	—	—	—
Total current liabilities	US$ in thousands	682,000	728,000	699,000
Cash ratio		0.01	0.14	0.18

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($5,000K + $—K) ÷ $682,000K
= 0.01

The cash ratio measures a company's ability to pay off its current liabilities with its cash and cash equivalents. A higher cash ratio indicates a stronger liquidity position.

Analyzing RXO Inc.'s cash ratio over the past six quarters, we observed fluctuations in the ratio. As of Dec 31, 2023, the cash ratio was at 0.01, indicating that the company had only 1 cent of cash and cash equivalents for every dollar of current liabilities. This low ratio suggests a potential liquidity risk, as the company may struggle to meet its short-term obligations using its available cash resources.

However, looking back at Sep 30, 2023, the cash ratio significantly improved to 0.14, indicating a notable increase in liquidity compared to the most recent quarter. This improvement suggests that RXO Inc. enhanced its cash position relative to its current liabilities, which could have been driven by increased cash reserves or reduced current liabilities during that period.

Further back, in Sep 30, 2022, the company had a cash ratio of 0.21, signifying a relatively strong liquidity position at that point in time. This indicated that the company had 21 cents of cash and cash equivalents for every dollar of current liabilities, showcasing a healthy liquidity cushion.

In conclusion, RXO Inc.'s cash ratio has shown fluctuations over the past six quarters, indicating varying levels of liquidity. The company should aim to maintain a healthy cash ratio to ensure it can meet its short-term obligations efficiently and avoid liquidity challenges.