Digi International Inc (DGII)

Quick ratio

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Cash	US$ in thousands	31,693	34,900	152,432	54,129	92,792
Short-term investments	US$ in thousands	—	—	—	—	—
Receivables	US$ in thousands	55,997	50,450	43,738	59,227	56,417
Total current liabilities	US$ in thousands	85,978	96,507	58,941	61,230	44,458
Quick ratio		1.02	0.88	3.33	1.85	3.36

September 30, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($31,693K + $—K + $55,997K) ÷ $85,978K
= 1.02

The quick ratio, also known as the acid-test ratio, is a liquidity ratio that 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 satisfactory, as it indicates that the company has enough liquid assets to cover its short-term liabilities.

Looking at the quick ratio of Digi International, Inc. over the past five years, we can see some fluctuations. In 2019, the quick ratio was 3.44, which was a strong indication of the company's ability to meet its short-term obligations with its current assets. This may have been due to a high level of cash or highly liquid assets on the company's balance sheet.

However, the quick ratio decreased to 1.94 in 2020, which still indicated a relatively strong ability to cover short-term liabilities. The decrease might have been caused by an increase in short-term liabilities or a decrease in the company's current assets.

In 2021, the quick ratio increased significantly to 3.44, reaching the same level as in 2019. This substantial increase might have been the result of a reduction in short-term liabilities or an increase in current assets, particularly highly liquid assets.

In 2022, the quick ratio dropped to 0.92, falling below the desirable threshold of 1. This decrease may indicate a weakening ability to cover short-term obligations with current assets. It could be a result of an increase in short-term liabilities or a decrease in current assets.

Finally, in 2023, the quick ratio improved to 1.07, bringing it back above the acceptable threshold. This improvement may have been due to a reduction in short-term liabilities or an increase in highly liquid assets.

In summary, Digi International, Inc.'s quick ratio has exhibited fluctuations over the past five years, with some years showing strong liquidity and others falling below the ideal threshold. It is important for the company to consistently monitor and manage its current assets and liabilities to ensure it maintains a healthy quick ratio and the ability to meet short-term obligations.