Xylem Inc (XYL)

Cash ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash and cash equivalents US$ in thousands 1,121,000 1,019,000 944,000 1,349,000 1,875,000
Short-term investments US$ in thousands — — — — —
Total current liabilities US$ in thousands 2,336,000 2,205,000 1,590,000 1,391,000 1,956,000
Cash ratio 0.48 0.46 0.59 0.97 0.96

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,121,000K + $—K) ÷ $2,336,000K
= 0.48

The cash ratio of Xylem Inc has shown a fluctuating trend over the last five years. Starting at 0.96 in December 31, 2020, the ratio increased slightly to 0.97 by the end of 2021. However, there was a significant decrease in the cash ratio to 0.59 by December 31, 2022. This was followed by a further decline to 0.46 by December 31, 2023. Nevertheless, there was a slight uptick to 0.48 by the end of 2024.

The cash ratio measures a company's ability to cover its short-term liabilities with its available cash and cash equivalents. A higher cash ratio indicates that the company has a stronger ability to meet its short-term obligations. In this case, the declining trend in Xylem Inc's cash ratio from 2020 to 2023 may imply that the company's liquidity position weakened during this period. However, the slight improvement in the cash ratio by the end of 2024 could suggest a modest recovery in the company's liquidity position. It is important for Xylem Inc to continue monitoring and managing its cash levels effectively to ensure it can meet its short-term obligations.