Tempur Sealy International Inc (TPX)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 74,900 | 69,400 | 300,700 | 65,000 | 64,900 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 908,200 | 981,200 | 1,053,400 | 974,800 | 773,300 |
| Cash ratio | 0.08 | 0.07 | 0.29 | 0.07 | 0.08 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($74,900K
+ $—K)
÷ $908,200K
= 0.08
The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio indicates a stronger ability to meet upcoming obligations without relying on external sources of funding.
Analyzing Tempur Sealy International Inc's cash ratio over the past five years, we observe a downward trend from 0.35 in 2019 to 0.21 in 2023. This decline could suggest a potential decrease in the company's liquidity and ability to cover its short-term liabilities solely with cash and cash equivalents.
While having a cash ratio above 1.0 is considered favorable as it indicates the company can cover all of its current liabilities with cash on hand, the declining trend in Tempur Sealy's cash ratio calls for attention. It implies that the company may have reduced its cash holdings relative to its short-term obligations, which could lead to liquidity challenges if not mitigated.
Further analysis and monitoring of Tempur Sealy's liquidity position, including its cash management strategies, working capital levels, and overall financial health, would be essential to assess the potential impact of the declining cash ratio on the company's financial stability.
Peer comparison
Dec 31, 2023