Powell Industries Inc (POWL)
Quick ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 245,875 | 101,954 | 114,314 | 160,216 | 118,639 |
| Short-term investments | US$ in thousands | 33,134 | 14,554 | 19,667 | 18,705 | 6,042 |
| Receivables | US$ in thousands | 206,691 | 106,216 | 78,465 | 70,424 | 112,326 |
| Total current liabilities | US$ in thousands | 395,686 | 186,373 | 121,156 | 152,947 | 157,896 |
| Quick ratio | 1.23 | 1.20 | 1.75 | 1.63 | 1.50 |
September 30, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($245,875K
+ $33,134K
+ $206,691K)
÷ $395,686K
= 1.23
The quick ratio, also known as the acid-test ratio, measures the ability of Powell Industries, Inc. to meet its short-term obligations with its most liquid assets. A quick ratio of 1 indicates that the company can fully cover its short-term liabilities with its quick assets, such as cash, marketable securities, and accounts receivable.
Examining Powell Industries' quick ratio over the past five years reveals a downward trend. In 2023, the quick ratio stands at 1.41, which is lower compared to the previous years. This decrease suggests that the company's ability to cover its short-term obligations with its liquid assets has declined.
A quick ratio of 1.41 in 2023 indicates that Powell Industries may face some challenges in meeting its short-term obligations using its current level of liquid assets. However, it is important to note that the quick ratio of 1.41 is still above 1, indicating that the company can meet its short-term liabilities, albeit to a lesser extent compared to previous years.
Given the decreasing trend in the quick ratio, stakeholders may be concerned about the company's liquidity position and its ability to address short-term financial commitments. Additionally, a lower quick ratio could potentially signal inefficiencies in managing accounts receivable, inventory, or cash flow, which may warrant further investigation.
It is essential for investors and stakeholders to consider additional factors such as industry benchmarks, overall financial performance, and management commentary to gain a comprehensive understanding of Powell Industries, Inc.'s liquidity position.
Peer comparison
Sep 30, 2023