Smith AO Corporation (AOS)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 339,900 | 391,200 | 443,300 | 573,100 | 374,000 |
| Short-term investments | US$ in thousands | 23,500 | 90,600 | 188,100 | 116,500 | 177,400 |
| Receivables | US$ in thousands | 596,000 | 581,200 | 634,400 | 585,000 | 589,500 |
| Total current liabilities | US$ in thousands | 945,300 | 934,200 | 1,118,800 | 886,300 | 766,500 |
| Quick ratio | 1.01 | 1.14 | 1.13 | 1.44 | 1.49 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($339,900K
+ $23,500K
+ $596,000K)
÷ $945,300K
= 1.01
The quick ratio of A.O. Smith Corp. has fluctuated over the past five years, ranging from 1.06 to 1.56. The quick ratio measures the company's ability to meet its short-term obligations with its most liquid assets, excluding inventory.
A quick ratio above 1 indicates that the company has enough liquid assets to cover its short-term liabilities. In this case, A.O. Smith Corp. has generally maintained quick ratios above 1 over the analyzed period, indicating a generally healthy liquidity position.
The decreasing trend in the quick ratio from 1.56 in 2019 to 1.06 in 2023 may be a cause for concern as it suggests a potential weakening in the company's ability to meet its short-term obligations using liquid assets. It is important for investors and stakeholders to further investigate the reasons behind this decline to assess the company's liquidity risk and financial health accurately.
Peer comparison
Dec 31, 2023