Stepan Company (SCL)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 129,823 | 173,750 | 159,186 | 349,938 | 315,383 |
| Short-term investments | US$ in thousands | — | — | — | 30,652 | — |
| Receivables | US$ in thousands | 422,050 | 436,914 | 419,542 | 301,318 | 276,841 |
| Total current liabilities | US$ in thousands | 607,870 | 670,649 | 500,476 | 416,554 | 339,114 |
| Quick ratio | 0.91 | 0.91 | 1.16 | 1.64 | 1.75 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($129,823K
+ $—K
+ $422,050K)
÷ $607,870K
= 0.91
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. Stepan Co.'s quick ratio has shown a declining trend over the past five years, decreasing from 1.81 in 2019 to 0.96 in 2023.
A quick ratio below 1 indicates that the company may have difficulty meeting its short-term liabilities with its quick assets alone. Stepan Co.'s current quick ratio of 0.96 falls below the ideal threshold of 1, suggesting potential liquidity challenges in fulfilling immediate payment obligations.
It is important to note that a declining quick ratio trend over time may raise concerns about the company's liquidity position and ability to cover short-term obligations efficiently. Further analysis of the company's cash flow management and working capital structure may be warranted to address any liquidity issues and ensure financial stability.
Peer comparison
Dec 31, 2023