Trane Technologies plc (TT)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 1,095,300 | 1,220,500 | 2,159,200 | 3,289,900 | 1,278,600 |
| Short-term investments | US$ in thousands | — | — | — | — | 25,000 |
| Total current liabilities | US$ in thousands | 6,053,500 | 5,686,800 | 4,752,400 | 4,338,900 | 5,238,600 |
| Cash ratio | 0.18 | 0.21 | 0.45 | 0.76 | 0.25 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,095,300K
+ $—K)
÷ $6,053,500K
= 0.18
The trend analysis of Trane Technologies plc's cash ratio over the past five years indicates a fluctuating pattern. The cash ratio dropped to 0.29 in December 2023 from 0.28 in December 2022, which suggests a slight decline in the company's ability to cover its current liabilities with cash and cash equivalents. This follows a notable decrease from 0.53 in December 2021 to 0.81 in December 2020, indicating a significant reduction in liquidity during that period. However, in December 2019, the cash ratio was 0.35, showing an improvement compared to the ratios in the subsequent years.
The cash ratio measures a company's ability to meet its short-term obligations with its most liquid assets. A higher ratio indicates a stronger liquidity position, while a lower ratio may suggest potential difficulties in meeting short-term liabilities. In the case of Trane Technologies plc, the declining trend in the cash ratio over the past few years may warrant further investigation into the company's liquidity management and potential impacts on its financial stability.