Southern Company (SO)

Quick ratio

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Cash US$ in thousands 748,000 1,917,000 1,798,000 1,065,000 1,975,000
Short-term investments US$ in thousands 6,169,000 1,362,000
Receivables US$ in thousands 2,481,000 2,067,000 1,728,000 1,635,000 1,565,000
Total current liabilities US$ in thousands 13,467,000 15,724,000 10,921,000 12,079,000 12,546,000
Quick ratio 0.24 0.65 0.32 0.34 0.28

December 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($748,000K + $—K + $2,481,000K) ÷ $13,467,000K
= 0.24

The quick ratio measures a company's ability to pay off its current liabilities without relying on the sale of inventory. It is calculated by dividing quick assets (cash, marketable securities, and accounts receivable) by current liabilities.

Analyzing Southern Company's quick ratio over the past five years, we observe fluctuating trends. In 2023, the quick ratio stands at 0.53, indicating that for every dollar of current liabilities, Southern Company has $0.53 of quick assets. This suggests a slight improvement compared to the prior year's quick ratio of 0.49.

The quick ratio was highest in 2021 at 0.61, implying a better ability to meet short-term obligations without relying on inventory. However, it dropped in 2022 and fell further in 2023. This downward trend may raise concerns about the company's liquidity position.

Comparing the quick ratio to the industry average and historical data could provide more insights into Southern Company's liquidity management and financial health. It is crucial for the company to maintain a strong quick ratio to ensure it can meet its short-term obligations efficiently and avoid liquidity challenges.


Peer comparison

Dec 31, 2023