Sitime Corporation (SITM)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	9,468	34,603	559,461	73,525	63,418
Short-term investments	US$ in thousands	518,733	529,494	—	—	—
Total current liabilities	US$ in thousands	121,394	33,794	37,385	19,145	53,311
Cash ratio		4.35	16.69	14.96	3.84	1.19

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($9,468K + $518,733K) ÷ $121,394K
= 4.35

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 meet short-term obligations.

SiTime Corp's cash ratio has shown significant fluctuations over the past five years. In 2023, the cash ratio was 4.41, indicating that the company had $4.41 in cash and cash equivalents for every $1 of current liabilities. This represents a decrease from the previous year's exceptionally high cash ratio of 16.87.

The considerable fluctuation in the cash ratio from 2022 to 2023 may suggest changes in the company's cash position, liquidity management, or short-term liabilities. A high cash ratio in 2022 may have indicated a conservative approach to cash management or a buildup of cash reserves for strategic purposes.

In contrast, the relatively low cash ratio in 2020 and 2019 may raise concerns about the company's ability to meet short-term obligations solely with available cash. A cash ratio below 1 suggests that the company may need to rely on other sources of liquidity to cover its current liabilities.

Overall, an upward trend in the cash ratio over time would indicate an improvement in the company's liquidity position and ability to weather short-term financial challenges. However, it is essential to consider other financial ratios and factors in conjunction with the cash ratio to gain a comprehensive understanding of SiTime Corp's financial health and liquidity management practices.