AAR Corp (AIR)
Quick ratio
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 85,800 | 68,400 | 53,500 | 51,800 | 404,700 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Receivables | US$ in thousands | 287,200 | 241,300 | 214,000 | 166,700 | 171,900 |
| Total current liabilities | US$ in thousands | 466,900 | 351,500 | 348,200 | 336,800 | 383,100 |
| Quick ratio | 0.80 | 0.88 | 0.77 | 0.65 | 1.51 |
May 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($85,800K
+ $—K
+ $287,200K)
÷ $466,900K
= 0.80
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 a company may have difficulty paying off its current liabilities without selling inventory or obtaining external financing.
Analyzing AAR Corp's quick ratio over the past five years, we observe fluctuations in the ratio. In 2020, the quick ratio was relatively high at 1.51, indicating a comfortable liquidity position. However, in subsequent years, the quick ratio declined, reaching its lowest point of 0.65 in 2021, suggesting a potential liquidity constraint.
The quick ratio improved slightly in 2022 and 2023 but remained below 1, implying that AAR Corp's ability to cover its short-term liabilities with its quick assets was still constrained during those periods. However, in 2024, the quick ratio decreased further to 0.80, indicating a potential deterioration in liquidity compared to the previous year.
Overall, the downward trend in AAR Corp's quick ratio over the past five years suggests a potential weakness in the company's liquidity position and its ability to meet its short-term obligations using its readily available assets. Further analysis of the components contributing to the quick ratio, such as cash, marketable securities, and accounts receivable, would provide deeper insights into the company's liquidity management and financial health.
Peer comparison
May 31, 2024