Sonic Automotive Inc (SAH)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	44,000	28,900	229,200	299,400	170,300
Short-term investments	US$ in thousands	—	-1,000	272,000	99,800	13
Total current liabilities	US$ in thousands	2,637,700	2,292,900	1,845,400	1,891,700	1,831,400
Cash ratio		0.02	0.01	0.27	0.21	0.09

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($44,000K + $—K) ÷ $2,637,700K
= 0.02

The cash ratio of Sonic Automotive Inc has shown varying trends over the past five years. As of December 31, 2020, the cash ratio was relatively low at 0.09, indicating that the company had limited cash and cash equivalents available to cover its current liabilities.

However, by December 31, 2021, the cash ratio had improved significantly to 0.21, suggesting that Sonic Automotive had increased its liquidity and was in a better position to meet its short-term obligations with its available cash reserves.

Subsequently, the cash ratio continued to rise to 0.27 by December 31, 2022, indicating even stronger liquidity and ability to cover current liabilities. This improvement may indicate efficient cash management or increased cash inflows during this period.

However, there was a sharp decline in the cash ratio to 0.01 by December 31, 2023, which could be a cause for concern as it indicates a significant decrease in liquidity compared to the previous year. This low cash ratio may signal potential challenges in meeting short-term obligations without other sources of liquidity.

By December 31, 2024, the cash ratio had slightly improved to 0.02, but it still remained relatively low, suggesting that Sonic Automotive may need to review its cash management practices or seek alternative sources of liquidity to enhance its ability to meet its current liabilities.

Overall, the fluctuating trends in Sonic Automotive Inc's cash ratio reflect changes in the company's liquidity position over the past five years, highlighting the importance of monitoring and managing cash reserves effectively to ensure financial stability and meet short-term obligations.