Semtech Corporation (SMTC)

Cash ratio

		Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Oct 25, 2020	Jul 26, 2020	Apr 26, 2020	Jan 26, 2020	Oct 27, 2019	Jul 28, 2019	Apr 28, 2019
Cash and cash equivalents	US$ in thousands	128,585	123,820	147,912	164,198	235,510	617,801	362,150	275,184	279,601	276,599	262,657	258,219	268,891	262,271	281,456	268,947	293,324	283,057	287,839	287,302
Short-term investments	US$ in thousands	14,545	12,725	12,870	12,803	12,557	1,025	11,766	11,544	12,402	—	—	—	—	—	—	—	10,700	2,027	1,013	3,605
Total current liabilities	US$ in thousands	217,156	238,997	321,057	309,756	396,855	140,093	140,129	110,416	128,399	123,909	116,366	96,512	109,573	105,873	102,072	91,626	98,641	101,147	110,577	103,330
Cash ratio		0.66	0.57	0.50	0.57	0.63	4.42	2.67	2.60	2.27	2.23	2.26	2.68	2.45	2.48	2.76	2.94	3.08	2.82	2.61	2.82

January 28, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($128,585K + $14,545K) ÷ $217,156K
= 0.66

The cash ratio of Semtech Corporation has shown some variability over the past few quarters. The cash ratio, which is a liquidity ratio that measures a company's ability to cover its short-term liabilities with its cash and cash equivalents, ranged from a low of 0.50 to a high of 4.42 during the period under consideration.

In general, a higher cash ratio indicates that a company has more liquid assets available to cover its short-term obligations. The significant spike in the cash ratio to 4.42 in the quarter ending October 30, 2022, suggests a substantial increase in Semtech Corporation's cash reserves relative to its short-term liabilities, possibly due to a successful period of cash generation or prudent cash management policies.

On the other hand, the subsequent drop in the cash ratio to 0.57 in the following quarter might indicate a decrease in the company's cash position relative to its short-term obligations. However, it is essential to consider the context and reasons behind such fluctuations, as they could be influenced by various factors such as investment decisions, operating cash flows, debt repayments, or other strategic initiatives.

Overall, while the cash ratio provides insights into Semtech Corporation's liquidity position, it is advisable to analyze this metric in conjunction with other liquidity ratios and qualitative factors to gain a more comprehensive understanding of the company's financial health and management of its cash resources.