NewJersey Resources Corporation (NJR)

Quick ratio

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Cash	US$ in thousands	954	1,107	4,749	117,012	2,676
Short-term investments	US$ in thousands	—	—	—	—	0
Receivables	US$ in thousands	105,604	216,687	198,537	136,157	139,625
Total current liabilities	US$ in thousands	806,603	1,104,150	1,051,410	533,722	446,377
Quick ratio		0.13	0.20	0.19	0.47	0.32

September 30, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($954K + $—K + $105,604K) ÷ $806,603K
= 0.13

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. A quick ratio of 1.0 or higher is generally considered acceptable, as it indicates that the company can cover its current liabilities with its quick assets.

Looking at the data for New Jersey Resources Corporation from 2019 to 2023, we can observe fluctuations in the quick ratio. In 2019, the quick ratio stood at 0.73, indicating that for every dollar of current liabilities, the company had $0.73 of quick assets. However, in 2020, the quick ratio increased substantially to 0.81, signaling an improvement in the company's ability to cover its short-term obligations with its liquid assets.

Subsequently, in 2021 and 2022, the quick ratio declined to 0.40 and 0.42, respectively. This decrease could indicate a reduction in the company's ability to meet its short-term obligations with its readily available assets during those years. However, it's worth noting that a quick ratio above 1.0 is not necessarily a sign of efficient management of assets, as it could indicate an underutilization of resources.

In 2023, the quick ratio fell further to 0.38, showing a continued decline in the company's ability to cover its current liabilities with its quick assets. This downward trend suggests that there may be a need for the company to reassess its liquidity management strategies.

In conclusion, New Jersey Resources Corporation's quick ratio has exhibited fluctuations over the years, with both improvements and declines. While the company's ability to cover its short-term obligations with its quick assets improved in 2020, it subsequently declined in the following years, warranting a closer examination of the company's liquidity position and management of its liquid resources.