Solventum Corp. (SOLV)

Quick ratio

		Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022
Cash	US$ in thousands	996,000	600,000	500,000	500,000	-61,000	61,000	—	—
Short-term investments	US$ in thousands	—	—	—	—	122,000	—	—	—
Receivables	US$ in thousands	—	—	—	—	—	—	—	—
Total current liabilities	US$ in thousands	1,854,000	1,771,000	1,471,000	1,412,000	1,382,000	1,311,000	—	—
Quick ratio		0.54	0.34	0.34	0.35	0.04	0.05	—	—

March 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($996,000K + $—K + $—K) ÷ $1,854,000K
= 0.54

Solventum Corp.'s quick ratio has shown significant fluctuations over the past few quarters. The quick ratio measures the firm's ability to meet its short-term obligations with its most liquid assets. A quick ratio below 1 indicates that the company may have difficulty meeting its short-term liabilities.

As of Mar 31, 2024, the quick ratio stands at 0.54, showing an improvement from the previous quarter's 0.34. Although an increase in the quick ratio is generally positive, it is important to note that the ratio is still below 1, suggesting that Solventum Corp. may have limited liquidity to cover its current liabilities.

Looking back at the financial performance, the quick ratio had been particularly low in the first quarter of 2023 at 0.04, which raised concerns about Solventum Corp.'s short-term solvency. The subsequent quarters showed gradual improvements, indicating efforts to enhance liquidity management.

It is crucial for Solventum Corp. to continue monitoring and managing its liquidity position effectively to ensure it can meet its short-term obligations. A sustained improvement in the quick ratio above 1 would provide greater confidence in the company's ability to honor its short-term commitments.