Liquidity Services Inc (LQDT)

Quick ratio

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Cash	US$ in thousands	110,281	96,122	106,335	76,036	36,497
Short-term investments	US$ in thousands	7,891	1,819	0	0	30,000
Receivables	US$ in thousands	7,848	11,792	5,866	5,322	6,704
Total current liabilities	US$ in thousands	120,718	123,503	109,173	74,324	68,822
Quick ratio		1.04	0.89	1.03	1.09	1.06

September 30, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($110,281K + $7,891K + $7,848K) ÷ $120,718K
= 1.04

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term liabilities with its most liquid assets. Liquidity Services Inc's quick ratios for the past five years are 1.12, 0.95, 1.09, 1.20, and 1.22 for the fiscal years ending September 30, 2023, 2022, 2021, 2020, and 2019 respectively.

The quick ratio indicates the company's ability to cover its short-term obligations using its most liquid assets, excluding inventory. A quick ratio of 1 or higher is generally considered satisfactory, as it suggests that the company can fully cover its current liabilities with its most liquid assets.

The trend of Liquidity Services Inc's quick ratio shows some fluctuation over the last five years. The quick ratio decreased from 1.22 in 2019 to 0.95 in 2022 before increasing to 1.12 in 2023. The decrease in 2022 may raise concerns as it indicates a potential decrease in the company's ability to cover its short-term liabilities with its liquid assets.

It's important to understand the reasons behind these fluctuations. A decrease in the quick ratio could be due to a decrease in cash or an increase in current liabilities relative to liquid assets. Conversely, an increase in the quick ratio can indicate an improvement in the company's liquidity position.

Overall, the quick ratio of Liquidity Services Inc indicates that, in general, the company has maintained a satisfactory ability to meet its short-term obligations with its most liquid assets, although there were fluctuations in recent years that may require further analysis to uncover underlying causes.