Hexcel Corporation (HXL)

Quick ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash	US$ in thousands	227,000	112,000	127,700	103,300	64,400
Short-term investments	US$ in thousands	—	—	—	44,000	—
Receivables	US$ in thousands	234,700	222,700	160,300	125,400	227,600
Total current liabilities	US$ in thousands	315,900	329,800	247,600	183,100	322,600
Quick ratio		1.46	1.01	1.16	1.49	0.91

December 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($227,000K + $—K + $234,700K) ÷ $315,900K
= 1.46

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. A quick ratio above 1 indicates that the company has more than enough liquid assets to cover its current liabilities.

Analyzing Hexcel Corp.'s quick ratio over the past five years, we observe a fluctuating trend. The quick ratio was relatively stable between 2019 and 2021, ranging from 1.15 to 1.45. However, in 2022, there was a notable decrease to 1.23, indicating a potential decrease in the company's ability to cover its short-term obligations with its liquid assets.

The quick ratio rebounded in 2023 to 1.68, surpassing the industry standard of 1. This improvement suggests that Hexcel Corp. has strengthened its liquidity position, which may be attributed to effective management of cash, marketable securities, and receivables.

Overall, a quick ratio above 1.5 is generally considered healthy, as it indicates a strong ability to cover short-term liabilities. Hexcel Corp.'s quick ratio of 1.68 in 2023 reflects an improved liquidity position, providing a positive indication of the company's ability to meet its current obligations using its liquid assets.