5 Companies with Current & Cash Ratio above 1 Time for the Past 3 Years

Both Current & Cash ratio are financial metrics that measures the overall financial health and liquidity of the individual company.

Current Ratio measures the company's short-term liquidity, that is, its ability to meet its short-term financial obligations as and when they fall due within the year with assets which are readily convertible into cash.

Meanwhile, Cash Ratio considers only the most liquid short-term assets - cash and investments readily convertible into cash - in measuring the company’s capacity to meet its short-term obligations as and when they fall due.

In this article, we will be looking at 5 companies that has cash & current ratio above 1 Time for the past 3 years:

• HRnetGroup Limited (SGX: CHZ)
• Challenger Technologies Limited (SGX: 573)
• Jumbo Group Limited (SGX: 42R)
• Samurai 2K Aerosol Limited (SGX: Y8E)
• The Trendlines Group Limited (SGX: 42T)

1) HRnetGroup Limited (SGX: CHZ)

HRnetGroup Limited (“HRnetGroup”) is a Singapore-based recruitment agency. The Company operates through two segments: flexible staffing and professional recruitment. It serves a spectrum of industries, including financial institutions, retail and consumer, information technology and telecommunications, manufacturing, insurance and logistics, and functions such as human resources, finance and accounting, and legal and compliance.

For the past 3 financial years, HRnetGroup’s financial metrics have been on a downward trend.

Despite that, its current & cash ratio has been relatively healthy in the latest financial year, coming in at 4.02 times and 3.2 times respectively. With that, it shows that the company has more than enough liquid assets on hand to pay off its current liabilities easily.

HRnetGroup’s share price last traded at S$0.80, with a market capitalization of S$803.01 million.

2) Challenger Technologies Limited (SGX: 573)

Challenger Technologies Limited (“Challenger”) is a Singapore-based information technology (“IT”) lifestyle retailer of personal computers, notebooks, printers, tablets and mobile devices. The Company operates through three segments, which include IT products and services, electronic signage services, and telephonic call center and data management services.

For the past 3 financial years, Challenger’s current ratio has been fluctuating between 2.85 times and 3.29 times.

On the other hand, its cash ratio has been on a steady rising trend, from 1.76 times in FY2018 to 2.21 times in FY2020. This indicates that the company’s cash level has been increasing and has more than enough resources on hand to meet its current liabilities obligations.

Challenger’s share price last traded at S$0.545, with a market capitalization of S$188.13 million.

3) Jumbo Group Limited (SGX: 42R)

Jumbo Group Limited (“Jumbo”) is one of Singapore’s leading multi-dining concept F&B establishments. It has a portfolio of 7 F&B brands - JUMBO Seafood, HACK IT, NG AH SIO Bak Kut Teh, Zui Teochew Cuisine, Chao Ting Pao Fan, Kok Kee Wanton Noodle and XINYAO Hainanese Chicken Rice.

For both FY2018 and FY2019, Jumbo’s financial metrics have been relatively stable. However, in FY2020, both current & cash ratio took a deep dive to just 1.67 times and 1.11 times.

The fall can be attributed to the payment of their lease obligations and the Acquisition of property, plant and equipment. Despite that, the company still has sufficient resources on hand to meet its current liabilities obligations.

Jumbo’s share price last traded at S$0.315, with a market capitalization of S$202.33 million.

4) Samurai 2K Aerosol Limited (SGX: Y8E)

Samurai 2K Aerosol Limited (“Samurai 2K”) is a leading aerosol coating specialist which focuses on high performance coating solutions for the automotive refinishing and refurbishing industry.

Headquartered in Malaysia, its products are manufactured in their own production facility located in Johor and are distributed in countries including Malaysia, Indonesia, Thailand, Philippines, Vietnam, Cambodia, United Kingdom, United States of America, Singapore and India.

After a rise in FY2020, Samurai 2K’s financial metrics suffered a decline in FY2021, with current & cash ratio stood at 2.58 times and 1.80 times.

The bigger decline in the current ratio was mainly due to the surge in short term debts and accounts payable, while the slight decline in its cash ratio was mitigated by the huge jump in its cash position.

Samurai 2k’s share price last traded at S$0.35, with a market capitalization of S$117.09 million.

5) The Trendlines Group Limited (SGX: 42T)

Trendlines is an investment company that invents, discovers, invests in, and incubates innovation-based medical and agri-food technologies to fulfill its mission to improve human condition. As intensely hands-on investors, Trendlines is involved in all aspects of its portfolio companies from technology development to business building.

For FY2019, Trendlines undertaken the corporate action of rights issue, which saw the company raise more than S$8 million in fresh funds. The net proceeds are used for direct and indirect investments into new, prospective or existing portfolio companies as well as general working capital.

This resulted in the huge jump in current ratio and cash ratio to 4.14 times and 3.89 times respectively. For those uninitiated, its vital for Trendlines to have a good cash buffer because they utilize these funds to invest in new medical and agri-food startups.

Trendlines’ share price last traded at S$0.10, with a market capitalization of S$79.11 million.

Conclusion

To conclude, both current & cash ratio are good metrics to determine whether companies can meet its short-term obligations.

In comparison, investors who wish to have a more stringent review on the repayment ability can consider adopting the cash ratio as it only considers the most liquid assets that the company has - cash and short-term investments.

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