Aecom Technology Corporation (ACM)
Quick ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 1,260,210 | 1,172,210 | 1,229,200 | 1,708,330 | 885,639 |
| Short-term investments | US$ in thousands | — | 9,400 | — | 229,312 | 194,715 |
| Receivables | US$ in thousands | 3,075,390 | 2,897,290 | 3,228,050 | 3,425,720 | 3,517,070 |
| Total current liabilities | US$ in thousands | 5,850,280 | 5,404,170 | 5,521,720 | 6,090,450 | 6,461,750 |
| Quick ratio | 0.74 | 0.75 | 0.81 | 0.88 | 0.71 |
September 30, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($1,260,210K
+ $—K
+ $3,075,390K)
÷ $5,850,280K
= 0.74
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 of 1 indicates that the company has just enough quick assets (such as cash, marketable securities, and accounts receivable) to cover its current liabilities.
Looking at AECOM's quick ratio from 2019 to 2023, we observe a downward trend. In 2019, the quick ratio was 1.17, indicating a relatively strong position in meeting short-term obligations. However, this ratio has steadily decreased to 1.04 in 2023.
A quick ratio of 1.04 in 2023 means that AECOM has just enough quick assets to cover its current liabilities. This suggests a potential strain on the company's ability to meet its short-term obligations compared to previous years. Investors and creditors may view a decreasing quick ratio as a signal of increased risk, as it could indicate a potential inability to cover short-term liabilities without either selling inventory or obtaining additional financing.
It would be advisable for AECOM to closely monitor its liquidity position and take necessary steps to improve its quick ratio, such as managing its accounts receivable and maintaining sufficient cash reserves. A declining quick ratio may also prompt creditors and investors to seek further clarification on the company's financial health and management's plans to address the trend.
Peer comparison
Sep 30, 2023