Keurig Dr Pepper Inc (KDP)

Quick ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash	US$ in thousands	510,000	267,000	535,000	567,000	240,000
Short-term investments	US$ in thousands	—	—	49,000	2,000	88,000
Receivables	US$ in thousands	1,723,000	1,519,000	1,668,000	1,274,000	1,144,000
Total current liabilities	US$ in thousands	8,087,000	8,916,000	8,076,000	6,485,000	7,694,000
Quick ratio		0.28	0.20	0.28	0.28	0.19

December 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($510,000K + $—K + $1,723,000K) ÷ $8,087,000K
= 0.28

The quick ratio, also known as the acid-test ratio, is a measure of a company's ability to meet its short-term obligations with its most liquid assets. It is calculated by subtracting inventories from current assets and then dividing by current liabilities.

Analyzing Keurig Dr Pepper Inc's quick ratio over the years indicates fluctuations in its short-term liquidity position. In 2020, the quick ratio was 0.19, suggesting that the company had $0.19 in liquid assets available to cover each dollar of current liabilities, which may have raised concerns about its ability to meet short-term obligations comfortably.

The quick ratio improved in 2021 and 2022 to 0.28, indicating a better ability to meet short-term obligations using liquid assets. This improvement may suggest more efficient management of working capital and a strengthened liquidity position during those years.

However, in 2023, the quick ratio decreased to 0.20, signaling a potential decline in the company's short-term liquidity compared to the previous years. A lower quick ratio could indicate increased dependency on inventory to meet short-term obligations, which may pose risks if the inventory cannot be quickly converted to cash.

In 2024, the quick ratio returned to 0.28, aligning with the levels observed in 2021 and 2022. This stability in the quick ratio may indicate consistent management of liquidity and working capital during that year.

Overall, fluctuations in Keurig Dr Pepper Inc's quick ratio over the years signify varying degrees of short-term liquidity, highlighting the importance of closely monitoring the company's ability to meet its current obligations with its liquid assets. It is essential for stakeholders to assess the reasons behind these changes to gauge the company's financial health and risk exposure.