Teradyne Inc (TER)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	553,354	757,571	854,773	1,122,200	914,121
Short-term investments	US$ in thousands	46,312	62,154	39,612	244,231	522,280
Total current liabilities	US$ in thousands	624,579	659,951	746,263	797,120	700,871
Cash ratio		0.96	1.24	1.20	1.71	2.05

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($553,354K + $46,312K) ÷ $624,579K
= 0.96

The cash ratio of Teradyne Inc has exhibited a declining trend over the past five years, from 2.05 in December 2020 to 0.96 in December 2024. This ratio measures the company's ability to cover its short-term liabilities with cash and cash equivalents.

A cash ratio above 1 indicates that the company has enough cash to cover its short-term obligations, with a higher ratio suggesting a stronger liquidity position. Teradyne Inc's cash ratio has consistently remained above 1 throughout the period, indicating sufficient liquidity to meet its short-term financial obligations.

However, the decreasing trend in the cash ratio over the years raises some concerns about the company's ability to maintain its liquidity position. It is essential for companies to closely monitor their cash ratios and ensure that they have adequate cash reserves to meet their financial obligations in a timely manner.

Overall, while Teradyne Inc has maintained a reasonably strong cash ratio above 1, management should keep a close eye on liquidity management strategies to ensure the company's financial health and ability to meet short-term obligations in the future.