SPS Commerce Inc (SPSC)

Cash ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash and cash equivalents US$ in thousands 241,017 219,081 162,893 207,552 149,692
Short-term investments US$ in thousands 0 56,359 51,412 49,758 37,786
Total current liabilities US$ in thousands 146,684 130,669 110,642 102,872 80,132
Cash ratio 1.64 2.11 1.94 2.50 2.34

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($241,017K + $0K) ÷ $146,684K
= 1.64

The cash ratio of SPS Commerce Inc, a measure of its liquidity position, has shown some fluctuations over the past five years. In 2020, the cash ratio was 2.34, indicating that the company had $2.34 in cash and cash equivalents for every $1 of current liabilities. This increased to 2.50 in 2021, suggesting an improvement in the company's ability to meet its short-term obligations with cash on hand.

However, in 2022, the cash ratio decreased to 1.94, which might signal a slight reduction in the company's ability to cover its short-term liabilities solely with cash reserves. The ratio rebounded to 2.11 in 2023, indicating a recovery in liquidity levels. Nonetheless, in 2024, the cash ratio dropped to 1.64, which could potentially point to a lower liquidity position compared to previous years.

Overall, while the cash ratio of SPS Commerce Inc has shown fluctuations, it is essential for investors and stakeholders to monitor this metric closely as it provides insights into the company's short-term liquidity and financial health.