Penguin Solutions, Inc. (PENG)

Quick ratio

		Aug 31, 2024	Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020
Cash	US$ in thousands	383,147	365,563	313,328	222,986	150,811
Short-term investments	US$ in thousands	6,337	25,251	0	—	—
Receivables	US$ in thousands	251,743	219,247	355,002	313,393	215,918
Total current liabilities	US$ in thousands	327,596	426,250	515,540	583,798	282,489
Quick ratio		1.96	1.43	1.30	0.92	1.30

August 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($383,147K + $6,337K + $251,743K) ÷ $327,596K
= 1.96

The quick ratio of Penguin Solutions, Inc. demonstrates notable fluctuation over the five-year period from August 31, 2020, to August 31, 2024. At the end of August 2020, the company's quick ratio was 1.30, indicating that its most liquid assets were sufficient to cover its current liabilities by 1.3 times. This level suggests a relatively comfortable liquidity position, allowing for short-term obligations to be met without relying on inventory sales.

In the subsequent year, the quick ratio declined to 0.92 as of August 31, 2021. This reduction indicates a decrease in liquidity, with liquid assets slightly insufficient to cover current liabilities, suggesting potential liquidity pressure during that period. Such a decline could be attributable to changes in accounts receivable, cash holdings, or increases in current liabilities.

By August 31, 2022, the ratio rebounded to 1.30, returning to the previous high level observed in 2020. This resurgence points to an improvement in liquidity, possibly due to effective cash management, reduction in current liabilities, or an increase in liquid assets.

The most recent data for August 31, 2023, shows a further increase in the quick ratio to 1.43. This upward trend indicates an enhancement in liquidity, reflecting that the company's liquid assets now exceed its short-term obligations by 1.43 times, offering a comfortable buffer.

The positive development continues into August 2024, with the quick ratio reaching 1.96. Approaching nearly double the coverage ratio, this suggests significant liquidity strength and a strong capacity to meet short-term liabilities promptly. The substantial increase over the five-year span indicates that Penguin Solutions, Inc. has improved its liquidity position considerably, potentially through strategic asset management, debt reduction, or increased cash reserves.

Overall, the progression of Penguin Solutions, Inc.'s quick ratio from 2020 to 2024 showcases an improvement in liquidity, moving from a vulnerable zone below unity in 2021 to a robust position approaching 2:1 coverage. This trend reflects positively on the company's financial health, liquidity management strategies, and potential capacity to withstand short-term financial challenges.