Applied Materials Inc (AMAT)
Quick ratio
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 6,132,000 | 1,995,000 | 4,995,000 | 5,351,000 | 3,129,000 |
| Short-term investments | US$ in thousands | 737,000 | 586,000 | 464,000 | 387,000 | 489,000 |
| Receivables | US$ in thousands | 5,577,000 | 6,529,000 | 5,546,000 | 3,125,000 | 2,629,000 |
| Total current liabilities | US$ in thousands | 7,372,000 | 7,379,000 | 6,344,000 | 4,459,000 | 4,447,000 |
| Quick ratio | 1.69 | 1.23 | 1.73 | 1.99 | 1.40 |
October 29, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($6,132,000K
+ $737,000K
+ $5,577,000K)
÷ $7,372,000K
= 1.69
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets. It is calculated by dividing quick assets (such as cash, marketable securities, and accounts receivable) by current liabilities.
Based on the quick ratio data for Applied Materials Inc., we observe fluctuations over the past five years.
In 2023, the quick ratio increased to 1.82 from 1.35 in 2022, indicating an improvement in the company's ability to cover its short-term liabilities with its quick assets. This increase suggests that Applied Materials Inc. is more capable of meeting its short-term obligations without relying extensively on inventory or other less liquid assets.
However, comparing the 2023 quick ratio to the one in 2021 when it was 1.86, the ratio decreased, signaling a slight reduction in the company's ability to cover its short-term obligations with its quick assets. This reduction may warrant further investigation into the company's management of its current assets and liabilities.
Despite the fluctuation over the years, Applied Materials Inc. has generally maintained a quick ratio above 1, which indicates that it has enough quick assets to cover its short-term liabilities. A quick ratio above 1 is considered healthy, as it suggests that the company is not overly reliant on inventory to meet its short-term obligations.
Further qualitative analysis and comparison with industry peers may provide deeper insights into the company's liquidity management and its ability to withstand short-term financial challenges.
Peer comparison
Oct 29, 2023