Patrick Industries Inc (PATK)

Quick ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash	US$ in thousands	11,409	22,847	122,849	44,767	139,390
Short-term investments	US$ in thousands	—	—	—	—	1,409
Receivables	US$ in thousands	163,838	172,890	172,392	132,505	87,536
Total current liabilities	US$ in thousands	308,496	367,240	432,777	227,389	186,935
Quick ratio		0.57	0.53	0.68	0.78	1.22

December 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($11,409K + $—K + $163,838K) ÷ $308,496K
= 0.57

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. A quick ratio below 1 indicates that a company may have difficulty meeting its short-term obligations without selling inventory or receiving payments from customers.

Looking at the trend of Patrick Industries, Inc.'s quick ratio over the past five years, we observe a declining trend. The quick ratio has decreased from 1.41 in 2019 to 0.73 in 2023. This suggests a weakening ability to cover short-term obligations with liquid assets.

In both 2022 and 2023, the quick ratio was below 1, indicating that the company may have had challenges meeting its short-term obligations without relying on inventory or receivables.

Furthermore, the significant drop in the quick ratio from 2020 to 2021, from 0.95 to 0.83, suggests a possible liquidity strain during this period.

Overall, a low and declining quick ratio for Patrick Industries, Inc. raises concerns about its short-term liquidity and ability to meet immediate financial obligations without having to rely heavily on inventory or accounts receivable.