The AES Corporation (AES)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 1,426,000 | 1,374,000 | 943,000 | 1,089,000 | 1,029,000 |
| Short-term investments | US$ in thousands | 395,000 | 730,000 | 232,000 | 335,000 | 400,000 |
| Receivables | US$ in thousands | 1,501,000 | 1,906,000 | 1,602,000 | 1,438,000 | 1,610,000 |
| Total current liabilities | US$ in thousands | 9,731,000 | 6,491,000 | 4,732,000 | 5,362,000 | 5,096,000 |
| Quick ratio | 0.34 | 0.62 | 0.59 | 0.53 | 0.60 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($1,426,000K
+ $395,000K
+ $1,501,000K)
÷ $9,731,000K
= 0.34
The quick ratio of AES Corp. has been fluctuating over the past five years. In 2023, the quick ratio dropped to 0.49 from 0.85 in 2022, indicating a decreasing trend in the short-term liquidity of the company. The quick ratio measures the company's ability to meet its short-term obligations with its most liquid assets.
An ideal quick ratio is generally considered to be 1 or higher, as it suggests that the company can easily cover its current liabilities with its quick assets. The declining trend in AES Corp.'s quick ratio may raise concerns about its ability to meet its short-term obligations using its readily available liquid assets.
It is important to further investigate the reasons behind the decreasing quick ratio over the years and understand if there are any significant changes in the company's current assets or current liabilities that are impacting its liquidity position. Additional analysis of factors such as inventory management, accounts receivable collection, and short-term debt levels would provide more insights into AES Corp.'s liquidity strength.