Dow Inc (DOW)
Quick ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 2,189,000 | 2,987,000 | 3,886,000 | 2,988,000 | 5,104,000 |
| Short-term investments | US$ in thousands | — | 1,705,000 | 949,000 | 265,000 | 45,000 |
| Receivables | US$ in thousands | 6,864,000 | 6,614,000 | 7,755,000 | 9,554,000 | 7,390,000 |
| Total current liabilities | US$ in thousands | 10,288,000 | 9,957,000 | 11,331,000 | 13,226,000 | 11,108,000 |
| Quick ratio | 0.88 | 1.14 | 1.11 | 0.97 | 1.13 |
December 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($2,189,000K
+ $—K
+ $6,864,000K)
÷ $10,288,000K
= 0.88
The quick ratio, also known as the acid-test ratio, provides insight into a company's short-term liquidity and ability to meet its immediate financial obligations using only its most liquid assets. Looking at Dow Inc's quick ratio over the past five years, we observe fluctuations in the ratio.
As of December 31, 2020, the quick ratio stood at 1.13, indicating that the company had $1.13 in liquid assets available to cover each dollar of current liabilities. This suggests a healthy liquidity position at the end of 2020.
However, by December 31, 2021, the quick ratio decreased to 0.97, signaling a slight deterioration in Dow Inc's ability to meet short-term obligations using its quick assets alone. It's important to investigate what caused this drop in the ratio.
Fortunately, in the subsequent years, the quick ratio showed improvement, rising to 1.11 by December 31, 2022, then slightly increasing further to 1.14 by December 31, 2023. These increases indicate a strengthening of Dow Inc's liquidity position and ability to cover short-term liabilities comfortably.
The most recent data point, as of December 31, 2024, shows a significant decrease in the quick ratio to 0.88. This drop may raise concerns about the company's liquidity and ability to meet immediate payment obligations using its quick assets.
In conclusion, while Dow Inc's quick ratio has shown fluctuations over the past five years, it is essential for stakeholders to closely monitor the trend in quick ratios to assess the company's short-term liquidity position and financial health effectively.
Peer comparison
Dec 31, 2024