Waste Management Inc (WM)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 458,000 | 351,000 | 118,000 | 553,000 | 3,561 |
| Short-term investments | US$ in thousands | — | — | — | 314,000 | 377,000 |
| Total current liabilities | US$ in thousands | 4,226,000 | 4,394,000 | 4,082,000 | 3,553,000 | 3,144,000 |
| Cash ratio | 0.11 | 0.08 | 0.03 | 0.24 | 0.12 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($458,000K
+ $—K)
÷ $4,226,000K
= 0.11
The cash ratio for Waste Management, Inc. has exhibited varying trends over the past five years. In 2019, the cash ratio was unusually high at 1.20, indicating a considerable amount of cash reserves relative to current liabilities. This could suggest strong liquidity and the ability to cover short-term obligations with ease.
However, the cash ratio decreased significantly in 2020 to 0.22, which might have been influenced by changes in cash positions or an increase in current liabilities. The decline in the ratio could potentially signal a slight weakening in liquidity or a shift in the company's cash management strategy.
In 2021, the cash ratio dropped further to 0.10, indicating a continued decrease in the ability to meet short-term obligations solely with cash on hand. This might raise concerns about the company's liquidity position and ability to handle immediate financial demands.
The trend reversed slightly in 2022, with the cash ratio increasing to 0.14, though it remained below the levels seen in earlier years. This improvement could suggest some efforts to enhance liquidity or better manage cash resources.
By the end of 2023, the cash ratio stood at 0.18, showing a further uptick compared to the previous year. While the ratio has increased, it still remains below the levels observed in 2019. This ongoing recovery in the cash ratio could indicate a positive trajectory in liquidity management, but continued monitoring is necessary to assess the company's ability to cover short-term liabilities with cash reserves effectively.
Overall, the fluctuating nature of Waste Management, Inc.'s cash ratio over the past five years highlights the importance of maintaining a balance between cash reserves and immediate financial obligations to ensure sustainable liquidity and financial health.
Peer comparison
Dec 31, 2023