Now Inc (DNOW)

Quick ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash US$ in thousands 256,000 299,000 212,000 313,000 387,000
Short-term investments US$ in thousands — — — — —
Receivables US$ in thousands — — — — —
Total current liabilities US$ in thousands 442,000 418,000 439,000 369,000 272,000
Quick ratio 0.58 0.72 0.48 0.85 1.42

December 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($256,000K + $—K + $—K) ÷ $442,000K
= 0.58

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. A quick ratio of 1 or higher typically indicates that a company can cover its current liabilities with its most liquid assets.

Now Inc's quick ratio has shown fluctuations over the past five years. Starting at 1.42 in December 31, 2020, the ratio decreased to 0.85 by December 31, 2021. This decline may suggest a potential strain on the company's short-term liquidity. By December 31, 2022, the quick ratio further dropped to 0.48, indicating a significant decrease in the ability to cover current liabilities with liquid assets.

However, there was an improvement by December 31, 2023, with the quick ratio increasing to 0.72. While this is an improvement from the previous year, the ratio is still below 1, pointing towards a continued challenge in meeting short-term obligations with liquid assets. In the most recent year, December 31, 2024, the quick ratio slightly decreased to 0.58, showing a persistent concern regarding the company's liquidity position.

Overall, the downward trend in Now Inc's quick ratio over the years, with the ratio consistently below 1, raises potential concerns about the company's ability to cover immediate liabilities with its most liquid assets. This suggests a need for further analysis and potential strategies to enhance short-term liquidity management.