Waste Management Inc (WM)
Cash ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 414,000 | 458,000 | 351,000 | 118,000 | 553,000 |
| Short-term investments | US$ in thousands | 200,000 | — | — | — | 314,000 |
| Total current liabilities | US$ in thousands | 6,258,000 | 4,226,000 | 4,394,000 | 4,082,000 | 3,553,000 |
| Cash ratio | 0.10 | 0.11 | 0.08 | 0.03 | 0.24 |
December 31, 2024 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($414,000K
+ $200,000K)
÷ $6,258,000K
= 0.10
The cash ratio of Waste Management Inc, which measures the ability of the company to cover its short-term liabilities with its available cash and cash equivalents, has shown fluctuations over the past five years.
As of December 31, 2020, the cash ratio was 0.24, indicating that Waste Management had $0.24 in cash and cash equivalents for every $1 of current liabilities. This suggests that the company had a strong ability to meet its short-term obligations with its available cash reserves.
However, by December 31, 2021, the cash ratio had decreased significantly to 0.03, signaling a sharp decline in the company's liquidity position. This could raise concerns about Waste Management's ability to meet its short-term financial obligations solely with its cash holdings.
Subsequently, by December 31, 2022, the cash ratio improved to 0.08, although it remained relatively low compared to the previous years. The increase in the cash ratio from the prior year indicates a slight improvement in Waste Management's liquidity position, but it may still be a cause for caution.
By December 31, 2023, the cash ratio further increased to 0.11, showing continued progress in strengthening the company's liquidity position. While the improvement is positive, the cash ratio still remains at a level that suggests caution in terms of the company's ability to cover its short-term liabilities with its available cash.
As of December 31, 2024, the cash ratio was 0.10, which is slightly lower compared to the previous year. The company's ability to meet its short-term obligations with its cash reserves remained relatively consistent compared to the prior year.
In conclusion, Waste Management Inc has experienced fluctuations in its cash ratio over the past five years, with a significant decline in 2021 followed by some improvement in the subsequent years. Monitoring the cash ratio is essential for assessing the company's liquidity risk and its ability to withstand short-term financial challenges.
Peer comparison
Dec 31, 2024