Watsco Inc (WSO)
Cash ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 526,271 | 210,112 | 147,505 | 118,268 | 146,067 |
| Short-term investments | US$ in thousands | 255,669 | 0 | — | — | 97,847 |
| Total current liabilities | US$ in thousands | 983,901 | 712,012 | 906,522 | 726,722 | 499,715 |
| Cash ratio | 0.79 | 0.30 | 0.16 | 0.16 | 0.49 |
December 31, 2024 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($526,271K
+ $255,669K)
÷ $983,901K
= 0.79
The cash ratio of Watsco Inc has shown fluctuations over the last five years. In December 2020, the cash ratio was 0.49, indicating that the company had $0.49 in cash and cash equivalents for every dollar of current liabilities. However, by December 2021 and 2022, the cash ratio dropped to 0.16, signaling a decrease in liquidity compared to the previous year.
Interestingly, there was a slight improvement in the cash ratio by December 2023, reaching 0.30. This indicates that Watsco Inc had a better ability to cover its short-term obligations with its cash reserves at the end of 2023.
Moreover, by December 2024, the cash ratio significantly increased to 0.79, reflecting a substantial improvement in liquidity compared to the previous years. This suggests that Watsco Inc was able to build up more cash reserves relative to its current liabilities by the end of 2024.
Overall, the trend in Watsco Inc's cash ratio indicates varying levels of liquidity over the years, with notable improvements in recent periods that may indicate a stronger financial position in terms of short-term cash availability relative to current liabilities.