Allegion PLC (ALLE)
Quick ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 503,800 | 468,100 | 288,000 | 397,900 | 480,400 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Receivables | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 696,900 | 1,079,700 | 703,600 | 601,200 | 521,500 |
| Quick ratio | 0.72 | 0.43 | 0.41 | 0.66 | 0.92 |
December 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($503,800K
+ $—K
+ $—K)
÷ $696,900K
= 0.72
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 or higher is usually considered healthy, indicating that a company has enough liquid assets to cover its short-term liabilities.
For Allegion PLC, the quick ratio has shown a decreasing trend over the years, standing at 0.92 as of December 31, 2020, dropping to 0.66 by December 31, 2021, further declining to 0.41 by December 31, 2022. However, there was a slight improvement by December 31, 2023, with the quick ratio increasing to 0.43, followed by a notable recovery to 0.72 by December 31, 2024.
The decreasing trend in the quick ratio from 2020 to 2022 suggests that Allegion PLC may have faced challenges in meeting its short-term obligations with its liquid assets during this period. However, the improvement in the quick ratio in 2023 and the significant recovery in 2024 indicate a positive shift towards a healthier liquidity position, providing better assurance of the company's ability to cover its short-term liabilities.
Overall, it is essential for Allegion PLC to monitor and manage its liquidity position effectively to ensure it maintains a healthy quick ratio, enabling the company to meet its short-term obligations efficiently and sustain its financial stability.