Shake Shack Inc (SHAK)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 224,653 | 230,521 | 302,406 | 146,873 | 37,099 |
| Short-term investments | US$ in thousands | 68,561 | 80,707 | 80,000 | 36,887 | 36,508 |
| Total current liabilities | US$ in thousands | 164,067 | 147,718 | 121,497 | 109,705 | 99,392 |
| Cash ratio | 1.79 | 2.11 | 3.15 | 1.68 | 0.74 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($224,653K
+ $68,561K)
÷ $164,067K
= 1.79
The cash ratio measures a company's ability to cover its short-term liabilities with its available cash and cash equivalents. A higher cash ratio indicates a stronger ability to pay off current obligations without relying on other sources of liquidity.
Shake Shack Inc's cash ratio has varied over the past five years, ranging from 0.74 to 3.15. In 2023, the cash ratio was 1.79, showing a decrease from the previous year's ratio of 2.11. Despite the decrease, the company still maintains a healthy level of liquidity to cover its short-term obligations.
The significant increase in the cash ratio from 2020 to 2021, reaching 3.15, indicates a substantial improvement in the company's liquidity position during that period. This suggests that Shake Shack had a higher proportion of cash and cash equivalents relative to its current liabilities in 2021.
Although the cash ratio decreased in 2023 compared to the peak in 2021, it is important to note that the ratio remains above 1, indicating that Shake Shack continues to have sufficient cash on hand to meet its short-term financial obligations without relying heavily on external financing sources.
Overall, while the fluctuation in Shake Shack Inc's cash ratio reflects changes in its liquidity position over the years, the company generally maintains a solid level of cash reserves to cover its immediate financial obligations.
Peer comparison
Dec 31, 2023