CarGurus (CARG)

Quick ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash	US$ in thousands	304,193	291,363	469,517	231,944	190,299
Short-term investments	US$ in thousands	0	20,724	0	90,000	100,000
Receivables	US$ in thousands	—	—	—	—	—
Total current liabilities	US$ in thousands	93,051	115,178	98,733	170,709	66,536
Quick ratio		3.27	2.71	4.76	1.89	4.36

December 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($304,193K + $0K + $—K) ÷ $93,051K
= 3.27

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term liabilities with its most liquid assets. A ratio above 1 indicates that a company has enough liquid assets to cover its short-term liabilities.

Based on the provided data for CarGurus, the quick ratio has exhibited varying trends over the years. As of December 31, 2020, the quick ratio was strong at 4.36, suggesting that CarGurus had a significant amount of liquid assets to cover its short-term obligations.

However, by December 31, 2021, the quick ratio had decreased to 1.89, indicating a potential reduction in the company's ability to meet its short-term liabilities with its liquid assets. This decrease may raise concerns about CarGurus' liquidity position at that point in time.

Subsequently, the quick ratio improved to 4.76 by December 31, 2022, signaling a positive development in the company's liquidity position and its ability to handle short-term obligations.

On December 31, 2023, the quick ratio decreased to 2.71, which, although lower than the previous year, still indicates that CarGurus had sufficient liquid assets to cover its short-term liabilities.

By December 31, 2024, the quick ratio further declined to 3.27, which, while lower than the peak in 2022, still suggests that CarGurus maintained a relatively strong liquidity position.

In summary, the fluctuating quick ratio for CarGurus over the analyzed period indicates variations in the company's ability to efficiently cover its short-term obligations with liquid assets. Further analysis of the company's financial health and operating environment would be necessary to fully assess the implications of these changes in the quick ratio.