CarGurus (CARG)

Quick ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash	US$ in thousands	291,363	469,517	231,944	190,299	59,920
Short-term investments	US$ in thousands	20,724	—	90,000	100,000	111,692
Receivables	US$ in thousands	39,963	46,817	189,324	18,235	22,124
Total current liabilities	US$ in thousands	115,178	98,733	170,709	66,536	73,758
Quick ratio		3.06	5.23	2.99	4.64	2.63

December 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($291,363K + $20,724K + $39,963K) ÷ $115,178K
= 3.06

The quick ratio, also known as the acid-test ratio, is a measure of a company's short-term liquidity and ability to meet its current obligations using its most liquid assets. A higher quick ratio is generally seen as favorable as it indicates a company has an increased ability to cover its short-term liabilities.

Based on the data provided for CarGurus Inc, the quick ratio has fluctuated over the past five years. In 2023, the quick ratio was 3.37, indicating that the company had $3.37 of liquid assets available to cover each $1 of current liabilities. Compared to the previous year (2022), where the quick ratio was higher at 5.54, the company's liquidity position decreased in 2023.

When comparing the 2023 quick ratio to earlier years, it is evident that the company's liquidity position has varied. In 2021 and 2020, the quick ratios were 3.14 and 4.99, respectively, showing fluctuations in the company's ability to cover short-term obligations. The lowest quick ratio was in 2019 at 2.97, indicating a lower liquidity position compared to the other years analyzed.

Overall, while the quick ratio for CarGurus Inc in 2023 is favorable at 3.37, the downward trend from 2022 warrants further monitoring to ensure the company maintains a strong liquidity position to meet its short-term obligations effectively.