Now Inc (DNOW)

Quick ratio

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Cash US$ in thousands 299,000 212,000 313,000 387,000 183,000
Short-term investments US$ in thousands — — — — —
Receivables US$ in thousands 384,000 398,000 304,000 198,000 370,000
Total current liabilities US$ in thousands 418,000 439,000 369,000 272,000 396,000
Quick ratio 1.63 1.39 1.67 2.15 1.40

December 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($299,000K + $—K + $384,000K) ÷ $418,000K
= 1.63

The quick ratio of NOW Inc has fluctuated over the past five years. In 2023, the quick ratio was 1.68, indicating the company had $1.68 of liquid assets available to cover each $1 of current liabilities. This was an improvement from 2022 when the quick ratio was 1.45. The increase in 2023 suggests an enhanced ability to meet short-term obligations without relying heavily on inventory.

Comparing 2023 to 2021 and 2019, where the quick ratios were 1.72 and 1.43 respectively, NOW Inc's liquidity position has remained relatively stable. However, there was a significant decrease in quick ratio in 2020 when it dropped to 2.20, suggesting a potential liquidity issue or a change in the company's operational efficiency that year.

Overall, a quick ratio above 1 indicates that NOW Inc has enough liquid assets to cover its short-term liabilities, but investors and creditors may want to further assess the company's ability to generate cash and manage its short-term obligations effectively, especially compared to previous years.