Owens Corning Inc (OC)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 1,615,000 | 1,099,000 | 959,000 | 717,000 | 172,000 |
| Short-term investments | US$ in thousands | — | — | 11,000 | — | — |
| Receivables | US$ in thousands | 987,000 | 961,000 | 939,000 | 919,000 | 770,000 |
| Total current liabilities | US$ in thousands | 2,324,000 | 2,104,000 | 1,697,000 | 1,440,000 | 1,329,000 |
| Quick ratio | 1.12 | 0.98 | 1.12 | 1.14 | 0.71 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($1,615,000K
+ $—K
+ $987,000K)
÷ $2,324,000K
= 1.12
The quick ratio, also known as the acid-test ratio, measures a company's ability to cover its short-term liabilities with its most liquid assets. A quick ratio of over 1 indicates that a company can meet its short-term obligations using a combination of its cash, cash equivalents, and accounts receivable.
Analyzing Owens Corning's quick ratio over the past five years, we observe fluctuations in the ratio. In 2019, the quick ratio was notably lower at 0.77, potentially indicating a riskier position regarding the company's ability to cover short-term obligations. However, in subsequent years, Owens Corning improved its quick ratio, reaching 1.17 by the end of 2023.
The quick ratio was above 1 in all years except 2019, reflecting Owens Corning's ability to cover its short-term liabilities with its liquid assets. The company's quick ratio was strongest in 2021 at 1.19. While the ratio slightly decreased in 2022 and then increased in 2023, it remained at adequate levels to meet short-term obligations.
Overall, Owens Corning's trend of maintaining a quick ratio above 1 indicates a sound liquidity position, ensuring the company's ability to meet its short-term obligations without relying heavily on selling inventory if needed. This steady improvement in the quick ratio signifies a positive liquidity trend for Owens Corning in recent years.