Archrock Inc (AROC)

Quick ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash	US$ in thousands	4,420	1,338	1,566	1,569	1,097
Short-term investments	US$ in thousands	—	—	—	—	—
Receivables	US$ in thousands	132,478	124,069	137,544	104,931	104,425
Total current liabilities	US$ in thousands	188,604	152,143	148,571	125,254	111,692
Quick ratio		0.73	0.82	0.94	0.85	0.94

December 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($4,420K + $—K + $132,478K) ÷ $188,604K
= 0.73

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 generally considered healthy, indicating that the company has enough liquid assets to cover its current liabilities.

For Archrock Inc, the quick ratio has shown some fluctuation over the past five years. In December 2020, the quick ratio was 0.94, indicating that the company had $0.94 in liquid assets available to cover each $1 of current liabilities. The ratio decreased slightly to 0.85 by December 2021, suggesting a potential strain on the company's ability to meet its short-term obligations.

However, the quick ratio improved to 0.94 again by December 2022, showing a better position in terms of liquidity. Subsequently, the ratio declined to 0.82 by December 2023, and further dropped to 0.73 by December 2024. These decreases signify a potential reduction in the company's ability to cover its current liabilities with its quick assets.

Overall, the trend in Archrock Inc's quick ratio raises some concerns about the company's liquidity position, particularly in the most recent years where the ratio has fallen below 1. It is important for stakeholders to monitor this ratio closely to ensure that the company can meet its short-term obligations effectively.