Photronics Inc (PLAB)

Quick ratio

		Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019
Cash	US$ in thousands	499,292	319,680	276,670	278,665	206,530
Short-term investments	US$ in thousands	12,915	38,820	0	—	—
Receivables	US$ in thousands	221,832	200,861	198,660	151,009	134,454
Total current liabilities	US$ in thousands	185,223	193,797	176,148	142,939	151,954
Quick ratio		3.96	2.89	2.70	3.01	2.24

October 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($499,292K + $12,915K + $221,832K) ÷ $185,223K
= 3.96

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. In the case of Photronics, Inc., the quick ratio has shown a generally improving trend over the past five years.

In 2019, the quick ratio stood at 2.50, indicating that the company had $2.50 of liquid assets available to cover each dollar of current liabilities. This ratio increased to 3.10 in 2020, suggesting an improvement in the company's short-term liquidity position. Notably, the quick ratio dipped slightly to 2.81 in 2021, possibly indicating a temporary strain on liquidity despite still being comfortably above the 1.0 threshold.

However, the trend reversed in the subsequent years. In 2022, the quick ratio further improved to 3.06, signaling the company's strengthened ability to cover short-term obligations with its liquid assets. This positive trend continued into 2023, with the quick ratio reaching 3.97. This significant increase implies that Photronics, Inc. had $3.97 in liquid assets available for every dollar of current liabilities, showcasing a robust short-term liquidity position compared to the previous years.

Overall, the trend in Photronics, Inc.'s quick ratio reflects a consistently improving ability to meet its short-term obligations with its liquid assets, indicating a positive financial position in managing its short-term liquidity.