Taylor Morn Home (TMHC)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	798,568	724,488	832,821	532,843	326,437
Short-term investments	US$ in thousands	—	1,090	2,110	5,294	2,099
Total current liabilities	US$ in thousands	161,264	306,072	413,887	127,289	123,233
Cash ratio		4.95	2.37	2.02	4.23	2.67

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($798,568K + $—K) ÷ $161,264K
= 4.95

The cash ratio measures the ability of a company to cover its short-term liabilities using its cash and cash equivalents. A higher cash ratio indicates a stronger liquidity position and a better ability to meet short-term obligations.

Analyzing Taylor Morrison Home Corp.'s cash ratio over the past five years shows fluctuation in liquidity levels. The company's cash ratio decreased from 1.05 in 2021 to 0.93 in 2023, indicating a slight decline in its ability to cover short-term liabilities with cash and cash equivalents. However, the ratio remains above 1 in each year, suggesting the company has sufficient liquid assets to meet its immediate obligations.

In comparison to 2020 and 2019, where the cash ratios were 0.81 and 0.85 respectively, there has been an improvement in liquidity levels in the more recent years. This demonstrates that Taylor Morrison Home Corp. has enhanced its ability to manage short-term obligations with its available cash resources.

Overall, while the cash ratio has shown some variability, Taylor Morrison Home Corp. has generally maintained a healthy liquidity position over the past five years, indicating a solid ability to address its short-term financial commitments using its cash reserves.