Smart Global Holdings Inc (SGH)

Quick ratio

		Aug 25, 2023	Aug 26, 2022	Aug 27, 2021	Aug 28, 2020	Aug 30, 2019
Cash	US$ in thousands	365,563	313,328	222,986	150,811	98,139
Short-term investments	US$ in thousands	25,251	0	—	—	—
Receivables	US$ in thousands	219,247	410,323	327,450	217,324	229,238
Total current liabilities	US$ in thousands	426,250	515,540	583,798	282,489	237,900
Quick ratio		1.43	1.40	0.94	1.30	1.38

August 25, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($365,563K + $25,251K + $219,247K) ÷ $426,250K
= 1.43

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its immediate short-term liabilities using its most liquid assets. SMART Global Holdings Inc's quick ratio over the past five years has shown some variation, as indicated in the table below:

Aug 25, 2023: 1.55
Aug 26, 2022: 1.61
Aug 27, 2021: 1.01
Aug 28, 2020: 1.39
Aug 30, 2019: 1.49

A quick ratio above 1.0 indicates that SMART Global Holdings Inc has adequate liquid assets to cover its short-term liabilities. The trend of the quick ratio shows improvement from 2021 to 2022, reaching a peak of 1.61, signifying a stronger ability to meet short-term obligations. However, in 2023, there was a slight decline in the quick ratio to 1.55, which could be a cause for further analysis.

By analyzing the quick ratio, we can conclude that SMART Global Holdings Inc has maintained a strong position in terms of liquidity and its ability to meet short-term financial obligations. However, the slight decline in 2023 suggests the need for careful monitoring to ensure the company's continued ability to cover its short-term liabilities with its liquid assets.