Synopsys Inc (SNPS)

Quick ratio

		Oct 31, 2024	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020
Cash	US$ in thousands	3,896,530	1,433,970	1,417,610	1,432,840	1,235,650
Short-term investments	US$ in thousands	153,869	151,639	147,913	147,949	0
Receivables	US$ in thousands	978,636	1,006,980	842,345	604,090	831,641
Total current liabilities	US$ in thousands	2,650,120	2,985,450	2,774,500	2,413,480	2,139,920
Quick ratio		1.90	0.87	0.87	0.91	0.97

October 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($3,896,530K + $153,869K + $978,636K) ÷ $2,650,120K
= 1.90

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. A quick ratio of 1 or higher is generally considered acceptable, as it indicates that a company can cover its current liabilities with its quick assets.

Analyzing Synopsys Inc's quick ratio over the past five years, we observe fluctuations in the metric. In 2020, the quick ratio was 0.97, which indicates that the company had almost enough quick assets to cover its current liabilities. However, in the following years, the quick ratio fluctuated: in 2021 it decreased to 0.91 but then increased to 0.87 in both 2022 and 2023.

The quick ratio significantly improved in 2024, reaching 1.90. This sharp increase suggests that in the most recent year, Synopsys Inc possessed a much higher level of quick assets relative to its current liabilities, potentially indicating improved liquidity and financial health.

Overall, despite some variability in the quick ratio over the years, the recent significant improvement in the quick ratio to 1.90 in 2024 is a positive sign for Synopsys Inc's liquidity position. This enhanced ability to meet short-term obligations with liquid assets demonstrates strength in managing current liabilities and may indicate improved financial stability.