Terex Corporation (TEX)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 370,700 | 304,100 | 266,900 | 665,000 | 535,100 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 1,119,200 | 998,600 | 909,900 | 723,300 | 872,400 |
| Cash ratio | 0.33 | 0.30 | 0.29 | 0.92 | 0.61 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($370,700K
+ $—K)
÷ $1,119,200K
= 0.33
The cash ratio of Terex Corp. has exhibited fluctuating trends over the past five years, as shown in the table. The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents.
In 2023, the cash ratio stands at 0.46, indicating that the company has $0.46 in cash and cash equivalents for every $1 of current liabilities. This suggests that Terex Corp. has less liquidity in the form of cash to cover its short-term obligations compared to the previous year.
Analyzing further, the cash ratio decreased from 0.49 in 2021 to 0.43 in 2022 before experiencing a slight increase in 2023. The notable decrease from 2021 to 2022 might be a cause for concern as it signifies a decline in the company's ability to meet its short-term obligations solely with cash on hand.
However, the significant decrease in the cash ratio from 1.22 in 2020 to 0.49 in 2021 is particularly noteworthy. This substantial drop indicates a significant reduction in Terex Corp.'s liquidity position in 2021, which could have stemmed from various factors such as aggressive investments, increased debt obligations, or a decrease in cash reserves.
Furthermore, comparing the cash ratio to 2019 reveals a decline from 0.87 to 0.46 in 2023. This downward trend over the five-year period suggests that the company may have faced challenges in managing its liquidity effectively.
Overall, the fluctuating cash ratio of Terex Corp. over the past five years indicates potential changes in the company's liquidity position and its ability to cover short-term financial obligations with cash. Further analysis of the company's cash flow management and overall financial health would be necessary to provide a more in-depth assessment of its liquidity condition.