LKQ Corporation (LKQ)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 299,000 | 278,000 | 274,000 | 312,000 | 523,387 |
| Short-term investments | US$ in thousands | — | — | — | 155,224 | — |
| Receivables | US$ in thousands | 1,165,000 | 998,000 | 1,073,000 | 1,073,390 | 1,131,130 |
| Total current liabilities | US$ in thousands | 3,318,000 | 2,271,000 | 2,165,000 | 1,988,490 | 2,178,510 |
| Quick ratio | 0.44 | 0.56 | 0.62 | 0.77 | 0.76 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($299,000K
+ $—K
+ $1,165,000K)
÷ $3,318,000K
= 0.44
The quick ratio of LKQ Corp has shown a downward trend over the past five years, declining from 0.88 in 2019 to 0.53 in 2023. This indicates a weakening ability of the company to meet its short-term obligations with its most liquid assets. A quick ratio below 1.0 may suggest potential liquidity concerns as it implies that the company may not be able to cover its current liabilities with its current assets, excluding inventory.
The decreasing trend in the quick ratio could be a cause for concern as it may indicate a reduction in the company's ability to quickly convert its current assets into cash to cover its short-term obligations. This trend warrants further investigation into the company's liquidity management and working capital efficiency to assess the potential risks associated with its current financial position.