Timken Company (TKR)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 418,900 | 331,600 | 257,100 | 320,300 | 209,500 |
| Short-term investments | US$ in thousands | 31,600 | 39,200 | 56,900 | 37,600 | 25,800 |
| Total current liabilities | US$ in thousands | 1,471,300 | 1,012,400 | 896,600 | 848,000 | 736,600 |
| Cash ratio | 0.31 | 0.37 | 0.35 | 0.42 | 0.32 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($418,900K
+ $31,600K)
÷ $1,471,300K
= 0.31
The cash ratio measures a company's ability to cover its short-term liabilities using its cash and cash equivalents. A higher cash ratio indicates that a company has more liquid assets available to meet its obligations.
Timken Co.'s cash ratio has shown some fluctuations over the past five years, ranging from 0.40 to 0.55. In 2023, the cash ratio decreased to 0.40 from 0.49 in 2022, indicating a lower ability to cover short-term liabilities with available cash. However, it is important to consider the context and industry norms when interpreting this ratio.
Overall, Timken Co.'s cash ratio has generally remained at a reasonable level over the years, demonstrating a consistent level of liquidity to meet its short-term obligations. Management should continue to monitor this ratio to ensure the company maintains adequate cash reserves for unforeseen circumstances.
Peer comparison
Dec 31, 2023