Southern Company (SO)
Quick ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 1,070,000 | 748,000 | 1,917,000 | 1,798,000 | 1,065,000 |
| Short-term investments | US$ in thousands | — | 2,424,000 | 6,169,000 | — | 1,362,000 |
| Receivables | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 15,993,000 | 13,467,000 | 15,724,000 | 10,921,000 | 12,079,000 |
| Quick ratio | 0.07 | 0.24 | 0.51 | 0.16 | 0.20 |
December 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($1,070,000K
+ $—K
+ $—K)
÷ $15,993,000K
= 0.07
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets. A quick ratio below 1 indicates that a company may have difficulty meeting its short-term liabilities.
Based on the provided data, Southern Company's quick ratio has fluctuated over the past five years. In December 2020, the quick ratio was 0.20, suggesting that the company had $0.20 in liquid assets available to cover each dollar of current liabilities. However, the quick ratio decreased to 0.16 by December 2021, indicating a potential decrease in the company's liquidity.
Southern Company's quick ratio improved significantly in December 2022, reaching 0.51. This suggests that the company had strengthened its ability to meet short-term obligations using its liquid assets. However, the quick ratio dropped to 0.24 in December 2023, indicating a potential decrease in liquidity compared to the previous year.
By December 2024, Southern Company's quick ratio decreased significantly to 0.07, signaling a significant decline in its ability to cover short-term liabilities with liquid assets. This could raise concerns about the company's liquidity position and its ability to meet immediate financial obligations.
In conclusion, Southern Company's quick ratio has shown fluctuations over the past five years, indicating changes in the company's liquidity position. It is essential for stakeholders to monitor the quick ratio closely to assess the company's ability to meet short-term financial commitments.
Peer comparison
Dec 31, 2024