Goodyear Tire & Rubber Co (GT)
Quick ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 810,000 | 902,000 | 1,227,000 | 1,088,000 | 1,539,000 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Receivables | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 7,337,000 | 7,147,000 | 7,140,000 | 6,612,000 | 5,106,000 |
| Quick ratio | 0.11 | 0.13 | 0.17 | 0.16 | 0.30 |
December 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($810,000K
+ $—K
+ $—K)
÷ $7,337,000K
= 0.11
The quick ratio, also known as the acid-test ratio, measures a company's ability to cover its short-term liabilities with its most liquid assets. A high quick ratio is typically seen as favorable, indicating the company has a strong ability to meet its short-term obligations.
Analyzing Goodyear Tire & Rubber Co's quick ratio over the past five years reveals a declining trend. In December 2020, the quick ratio stood at 0.30, indicating that the company had $0.30 of highly liquid assets for every $1 of current liabilities. However, the ratio decreased to 0.16 by December 2021, implying a deterioration in the company's short-term liquidity position.
Subsequently, the quick ratio slightly improved to 0.17 in December 2022 but then dropped to 0.13 by December 2023 and further to 0.11 by December 2024. These declining quick ratios suggest that Goodyear Tire & Rubber Co may be facing challenges in meeting its short-term obligations with its existing liquid assets.
Investors and stakeholders may view this trend with caution as a declining quick ratio could indicate potential liquidity issues for the company. It may be advisable for Goodyear to closely monitor its liquidity position and take necessary steps to improve its ability to cover short-term liabilities with more liquid assets in the future.