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


See also:

Alphabet Inc Class C Quick Ratio