Griffon Corporation (GFF)
Quick ratio
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 114,438 | 102,889 | 120,184 | 248,653 | 218,089 |
| Short-term investments | US$ in thousands | — | — | 62 | 16,044 | 1,703 |
| Receivables | US$ in thousands | 312,765 | 312,432 | 361,653 | 294,804 | 348,124 |
| Total current liabilities | US$ in thousands | 348,990 | 359,149 | 423,579 | 531,636 | 441,822 |
| Quick ratio | 1.22 | 1.16 | 1.14 | 1.05 | 1.29 |
September 30, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($114,438K
+ $—K
+ $312,765K)
÷ $348,990K
= 1.22
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. It is calculated by dividing quick assets (cash, marketable securities, and accounts receivable) by current liabilities. A quick ratio of 1 or higher is generally considered healthy, as it indicates the company has sufficient liquid assets to cover its short-term liabilities.
Griffon Corporation's quick ratio has fluctuated over the past five years, ranging from 1.05 to 1.29. The quick ratio of 1.22 as of September 30, 2024, reflects that for every dollar of current liabilities, Griffon has $1.22 of quick assets available to meet those obligations. This suggests the company has a comfortable buffer of liquid assets to cover its short-term debt.
The upward trend in Griffon's quick ratio from 2021 to 2024 indicates an improvement in the company's liquidity position and its ability to meet short-term obligations. However, it is essential to further investigate the composition of quick assets and current liabilities to gain a deeper understanding of Griffon's liquidity management and financial health.