Alcoa Corp (AA)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 944,000 | 1,363,000 | 1,814,000 | 1,607,000 | 879,000 |
| Short-term investments | US$ in thousands | 29,000 | -21,000 | 14,000 | 21,000 | 59,000 |
| Receivables | US$ in thousands | 808,000 | 909,000 | 884,000 | 556,000 | 660,000 |
| Total current liabilities | US$ in thousands | 3,030,000 | 3,004,000 | 3,223,000 | 2,761,000 | 2,563,000 |
| Quick ratio | 0.59 | 0.75 | 0.84 | 0.79 | 0.62 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($944,000K
+ $29,000K
+ $808,000K)
÷ $3,030,000K
= 0.59
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. A quick ratio below 1 indicates that the company may have difficulty meeting its short-term obligations.
Analyzing Alcoa Corp's quick ratio over the past five years, we observe a fluctuating trend. In 2023, the quick ratio decreased to 0.74 from 0.94 in 2022. This decline suggests that Alcoa Corp's ability to cover its short-term liabilities with its most liquid assets weakened compared to the previous year.
Looking back further, the quick ratio was relatively stable around 0.90 in 2021 and 2020, indicating a moderate level of liquidity to meet short-term obligations. However, in 2019, the quick ratio was at a similar level to 2023 at 0.74, reflecting a comparatively weaker liquidity position.
It is important for Alcoa Corp to closely monitor its liquidity position, as a consistently low quick ratio can be a red flag for investors and creditors, indicating potential challenges in meeting short-term financial obligations. Management may need to focus on improving working capital management to enhance the company's liquidity position and financial stability.
Peer comparison
Dec 31, 2023