Twilio Inc (TWLO)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	421,297	655,931	651,752	1,479,450	933,885
Short-term investments	US$ in thousands	1,963,100	3,356,060	3,503,320	3,878,430	2,105,910
Total current liabilities	US$ in thousands	820,220	738,297	808,158	703,550	448,306
Cash ratio		2.91	5.43	5.14	7.62	6.78

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($421,297K + $1,963,100K) ÷ $820,220K
= 2.91

The cash ratio of Twilio Inc. over the specified period demonstrates notable fluctuations. At the end of December 2020, the cash ratio stood at 6.78, indicating that the company's cash and cash equivalents were more than sufficient to cover its current liabilities, with a high degree of liquidity. Moving into December 2021, the ratio increased to 7.62, reflecting an even stronger liquidity position and an enhanced ability to meet short-term obligations solely with cash and cash equivalents.

However, subsequent years reveal a decline in the cash ratio, with December 2022 recording a decrease to 5.14. Although still substantially above 1, this reduction suggests a relative decline in the proportion of liquid assets compared to current liabilities, possibly due to increased operational activities or investment in less liquid current assets. The ratio further marginally decreased to 5.43 in December 2023, indicating a slight stabilization but still maintaining a strong liquidity stance.

By December 2024, the cash ratio declined more significantly to 2.91. While this value remains above the critical threshold of 1, indicating sufficient cash holdings to cover current liabilities, the downward trend signifies a reduction in immediate liquidity. This decline could be interpreted as a shift in the company's liquidity management or a strategic deployment of cash into other assets or investments.

Overall, Twilio Inc.’s cash ratio has exhibited a declining trend over the analyzed period, transitioning from exceptionally high levels in 2020 and 2021 to a more moderate but still robust liquidity position by 2024. This trend warrants ongoing monitoring to assess whether the company maintains adequate liquidity for its operational needs and short-term commitments as its financial and operational environment evolves.