Alphabet Inc Class C (GOOG)
Quick ratio
Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
---|---|---|---|---|---|---|
Cash | US$ in thousands | 24,048,000 | 21,879,000 | 20,945,000 | 26,465,000 | 18,498,000 |
Short-term investments | US$ in thousands | 86,868,000 | 91,883,000 | 118,704,000 | 110,229,000 | 101,177,000 |
Receivables | US$ in thousands | 47,964,000 | 40,258,000 | 40,270,000 | 31,384,000 | 27,492,000 |
Total current liabilities | US$ in thousands | 81,814,000 | 69,300,000 | 64,254,000 | 56,834,000 | 45,221,000 |
Quick ratio | 1.94 | 2.22 | 2.80 | 2.96 | 3.25 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($24,048,000K
+ $86,868,000K
+ $47,964,000K)
÷ $81,814,000K
= 1.94
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term liabilities with its most liquid assets. It is calculated by dividing the sum of cash, cash equivalents, and accounts receivable by the current liabilities.
Based on the data provided, Alphabet Inc's quick ratio has experienced a declining trend over the past five years, decreasing from 3.35 in 2019 to 2.10 in 2023. This indicates that the company's ability to cover its short-term obligations with its most liquid assets has weakened over this period.
A quick ratio above 1.0 is generally considered favorable, as it suggests that a company has an adequate level of liquid assets to cover its short-term liabilities. Therefore, Alphabet Inc's quick ratio, although declining, remains above 1.0 in all years, indicating that the company still has the capacity to meet its short-term obligations.
However, the decreasing trend suggests that the company may have experienced changes in its working capital management or faced challenges in collecting its accounts receivable, which could potentially impact its liquidity in the short term.
Overall, while Alphabet Inc's quick ratio indicates that it has sufficient liquid assets to cover its short-term liabilities, monitoring the trend and investigating the underlying factors contributing to the decline is important for a comprehensive assessment of the company's liquidity position.
Peer comparison
Dec 31, 2023