Phillips 66 (PSX)
Quick ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 1,738,000 | 3,323,000 | 6,133,000 | 3,147,000 | 2,514,000 |
| Short-term investments | US$ in thousands | — | — | 329,000 | — | 13,624,000 |
| Receivables | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 15,087,000 | 15,856,000 | 15,889,000 | 12,801,000 | 9,518,000 |
| Quick ratio | 0.12 | 0.21 | 0.41 | 0.25 | 1.70 |
December 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($1,738,000K
+ $—K
+ $—K)
÷ $15,087,000K
= 0.12
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. For Phillips 66, the quick ratio has fluctuated over the years:
- In December 31, 2020, the quick ratio stood at 1.70, indicating a strong ability to cover short-term liabilities with liquid assets.
- However, by December 31, 2021, the quick ratio had decreased significantly to 0.25, suggesting a potential liquidity concern as the company may have had difficulties meeting its immediate obligations with its quick assets.
- The ratio improved slightly by December 31, 2022, reaching 0.41, but it still remained below the ideal benchmark of 1. This indicates that Phillips 66 may still be facing challenges in quickly covering its short-term liabilities.
- As of December 31, 2023, the quick ratio dropped further to 0.21, exacerbating concerns about the company's ability to meet its short-term obligations with its available liquid assets.
- By December 31, 2024, the quick ratio deteriorated to 0.12, signaling a continued decline in Phillips 66's liquidity position and raising red flags about its short-term financial stability.
In conclusion, the trend in Phillips 66's quick ratio demonstrates a concerning decline in the company's ability to promptly cover its short-term obligations with its liquid assets over the years. Investors and stakeholders should closely monitor the company's liquidity position and financial management strategies to address these challenges effectively.
Peer comparison
Dec 31, 2024