Smart Global Holdings Inc (SGH)

Cash ratio

		Aug 25, 2023	Aug 26, 2022	Aug 27, 2021	Aug 28, 2020	Aug 30, 2019
Cash and cash equivalents	US$ in thousands	365,563	313,328	222,986	150,811	98,139
Short-term investments	US$ in thousands	25,251	0	—	—	—
Total current liabilities	US$ in thousands	426,250	515,540	583,798	282,489	237,900
Cash ratio		0.92	0.61	0.38	0.53	0.41

August 25, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($365,563K + $25,251K) ÷ $426,250K
= 0.92

The cash ratio is a financial ratio that measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. It is calculated by dividing a company's cash and cash equivalents by its current liabilities. A higher cash ratio indicates a stronger ability to cover short-term obligations.

Based on the provided data for SMART Global Holdings Inc, the cash ratio has shown fluctuations over the past five years. In August 2023, the cash ratio stood at 1.04, representing an improvement from the previous year. This indicates that the company had $1.04 in cash and cash equivalents for every dollar of current liabilities. A high cash ratio suggests a strong liquidity position and the ability to meet short-term obligations without relying on external sources.

Comparing this with the previous years, we observe a mixed trend. In August 2022, the cash ratio was 0.81, which was lower than the most recent figure but still relatively healthy. The cash ratio then experienced a significant increase from 0.47 in August 2021 to 0.62 in August 2020, indicating an improvement in the company's liquidity position over that period. However, the cash ratio in August 2019 was slightly lower at 0.52.

Overall, the trend in SMART Global Holdings Inc's cash ratio shows some volatility but generally indicates a positive liquidity position, with the company holding an increasing amount of cash and cash equivalents relative to its current liabilities in recent years. This suggests a strengthening ability to meet short-term obligations, which is favorable for the company's financial health and stability.