HP Inc (HPQ)
Quick ratio
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 3,107,000 | 3,145,000 | 4,299,000 | 4,864,000 | 4,537,000 |
| Short-term investments | US$ in thousands | 3,336,000 | 5,000 | 5,000 | 274,000 | 56,000 |
| Receivables | US$ in thousands | 5,586,000 | 1,270,000 | 7,844,000 | 7,473,000 | 7,982,000 |
| Total current liabilities | US$ in thousands | 24,488,000 | 26,189,000 | 29,096,000 | 26,220,000 | 25,293,000 |
| Quick ratio | 0.49 | 0.17 | 0.42 | 0.48 | 0.50 |
October 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($3,107,000K
+ $3,336,000K
+ $5,586,000K)
÷ $24,488,000K
= 0.49
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. The trend of HP Inc's quick ratio over the past five years shows a slight decrease from 0.57 in 2019 to 0.45 in 2023, indicating a declining liquidity position.
A quick ratio of 0.45 as of October 31, 2023, suggests that for every dollar of current liabilities, HP Inc has $0.45 of quick assets available to cover these obligations. This may indicate a potential challenge in meeting its short-term liabilities using its most liquid assets alone.
It's important to investigate the underlying factors contributing to this declining trend, as a decreasing quick ratio could signal issues with managing cash flow, inventory, or receivables. However, it's also worth noting that the quick ratio of 0.45 still provides some indication of liquidity, but a higher ratio would generally be more favorable for the company.
Further analysis of HP Inc's cash management, inventory turnover, and accounts receivable collection processes would provide a better understanding of the reasons behind the decreasing trend in its quick ratio and potential areas for improvement.
Peer comparison
Oct 31, 2023