Toll Brothers Inc (TOL)

Cash ratio

		Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019
Cash and cash equivalents	US$ in thousands	1,300,070	1,346,750	1,638,490	1,370,940	1,286,010
Short-term investments	US$ in thousands	—	343,314	—	—	—
Total current liabilities	US$ in thousands	106,036	317,411	155,559	155,202	157,897
Cash ratio		12.26	5.32	10.53	8.83	8.14

October 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,300,070K + $—K) ÷ $106,036K
= 12.26

The cash ratio, which measures a company's ability to cover its short-term liabilities with its cash and cash equivalents, for Toll Brothers Inc. over the last five years has shown some fluctuations.

In 2023, the cash ratio stood at 0.36, consistent with the previous year's 0.36. This indicates that Toll Brothers Inc. had $0.36 in cash and cash equivalents for every $1 of current liabilities, reflecting a stable liquidity position.

Comparing this to previous years, the ratio was higher in 2021 at 0.49 and slightly lower in 2020 at 0.44 and 2019 at 0.48. The higher ratios in 2021 and 2019 might suggest a stronger ability to cover short-term obligations with cash. However, the slight decrease in 2020 may indicate a temporary decrease in liquidity.

Overall, while the cash ratio has shown some variability, it remains above 0.3 in each year, indicating a generally healthy ability to meet short-term obligations with cash and cash equivalents. It's worth noting that a higher cash ratio is generally preferred as it signifies a stronger ability to cover short-term liabilities.