Trane Technologies plc (TT)
Cash ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 1,590,100 | 1,095,300 | 1,220,500 | 2,159,200 | 3,289,900 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 6,068,900 | 6,053,500 | 5,686,800 | 4,752,400 | 4,338,900 |
| Cash ratio | 0.26 | 0.18 | 0.21 | 0.45 | 0.76 |
December 31, 2024 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,590,100K
+ $—K)
÷ $6,068,900K
= 0.26
The cash ratio of Trane Technologies plc has exhibited a declining trend over the past five years, dropping from 0.76 as at December 31, 2020 to 0.26 as at December 31, 2024. This ratio indicates the company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio is generally preferred as it signifies a stronger liquidity position.
Trane Technologies plc's decreasing cash ratio may raise concerns about its liquidity management, especially if the trend persists. It is important for the company to ensure that it maintains an adequate level of cash reserves to meet its short-term obligations without relying too much on external sources of financing. Further analysis of the company's cash flow and working capital management practices may provide additional insights into the factors driving this trend.