Greif Bros Corporation (GEF)
Quick ratio
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 180,900 | 147,100 | 124,600 | 105,900 | 77,300 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Receivables | US$ in thousands | 659,400 | 749,100 | 889,500 | 636,600 | 664,200 |
| Total current liabilities | US$ in thousands | 939,300 | 1,047,900 | 1,314,100 | 1,000,100 | 825,400 |
| Quick ratio | 0.89 | 0.86 | 0.77 | 0.74 | 0.90 |
October 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($180,900K
+ $—K
+ $659,400K)
÷ $939,300K
= 0.89
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets. The formula for the quick ratio is (Current Assets - Inventories) / Current Liabilities.
Looking at Greif Inc's quick ratio from October 31, 2019, to October 31, 2023, we can see the following trend:
- Oct 31, 2019: Quick ratio of 1.07
- Oct 31, 2020: Quick ratio of 0.94
- Oct 31, 2021: Quick ratio of 0.88
- Oct 31, 2022: Quick ratio of 1.04
- Oct 31, 2023: Quick ratio of 1.09
The quick ratio has fluctuated over the period, ranging from 0.88 to 1.09. A quick ratio above 1.0 is generally considered healthy, as it suggests that the company has more than enough liquid assets to cover its short-term liabilities.
The upward trend from 2021 to 2023 is a positive sign, indicating that Greif Inc has improved its liquidity position and its ability to meet short-term obligations. This may be the result of a decrease in inventories relative to current liabilities or an increase in other current assets.
However, it's critical to note that a quick ratio above 1.0 does not necessarily indicate optimal liquidity. It's important to consider the nature of the business, the industry norms, and any other specific factors that may influence the interpretation of this ratio.
In conclusion, Greif Inc's quick ratio has shown improvement in recent years, reflecting a strengthening liquidity position and a better ability to meet short-term obligations. Nonetheless, further analysis and consideration of industry benchmarks are essential for a comprehensive assessment of the company's liquidity.