Compass Minerals International Inc (CMP)

Quick ratio

		Sep 30, 2023	Sep 30, 2022	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Cash	US$ in thousands	38,700	46,100	10,600	18,000	27,000
Short-term investments	US$ in thousands	—	—	20,000	16,700	—
Receivables	US$ in thousands	129,500	167,200	185,100	342,400	311,600
Total current liabilities	US$ in thousands	275,800	233,100	296,700	295,900	283,300
Quick ratio		0.61	0.92	0.73	1.27	1.20

September 30, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($38,700K + $—K + $129,500K) ÷ $275,800K
= 0.61

The quick ratio, also known as the acid-test ratio, indicates a company's ability to meet its short-term liabilities with its most liquid assets. A quick ratio of 1.0 or higher is generally considered favorable, as it suggests the company has enough liquid assets to cover its short-term obligations without having to rely on selling its inventory.

Looking at the quick ratio for Compass Minerals International Inc over the past five years, we can see fluctuations in the company's ability to cover its short-term liabilities with its liquid assets.

In 2023, the quick ratio is 0.73, which is a significant decrease from the previous year. This suggests that the company's current assets, excluding inventory, may not be sufficient to cover its current liabilities. This could raise concerns about the company's short-term liquidity position.

In 2022, the quick ratio was 1.11, indicating that the company had enough liquid assets to cover its short-term obligations, which is a positive sign for creditors and investors.

In 2020, the quick ratio decreased to 0.85, reflecting a potential decline in the company's ability to meet short-term obligations with its liquid assets compared to the previous year.

In 2019 and 2018, the quick ratio was 1.58 and 1.59, respectively, indicating that the company had a strong ability to cover its short-term liabilities with its liquid assets during those periods.

The trend in Compass Minerals International Inc's quick ratio suggests fluctuating liquidity levels over the years. A declining quick ratio could indicate potential challenges in meeting short-term obligations, while an improving ratio indicates a strengthened liquidity position.

Overall, it’s important to consider other financial metrics and the company's operational and market conditions to gain a comprehensive understanding of its financial health.