Toll Brothers Inc (TOL)
Quick ratio
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 1,300,070 | 1,346,750 | 1,638,490 | 1,370,940 | 1,286,010 |
| Short-term investments | US$ in thousands | — | 343,314 | — | — | — |
| Receivables | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 106,036 | 317,411 | 155,559 | 155,202 | 157,897 |
| Quick ratio | 12.26 | 5.32 | 10.53 | 8.83 | 8.14 |
October 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($1,300,070K
+ $—K
+ $—K)
÷ $106,036K
= 12.26
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 of 1 or higher is generally considered favorable, as it indicates that a company has enough liquid assets to cover its current liabilities.
Toll Brothers Inc.'s quick ratio has shown a declining trend over the past five years, decreasing from 0.64 in 2019 to 0.42 in 2023. This indicates a potential deterioration in the company's ability to meet its short-term obligations with its readily available assets.
While a quick ratio above 1 is desirable, the quick ratio for Toll Brothers Inc. has consistently been below this benchmark, suggesting that the company may have relied on inventory or accounts receivable to meet its short-term liabilities. This could potentially expose the company to liquidity risks, particularly during times of economic uncertainty or adverse market conditions.
Further analysis of the company's cash flow and working capital management may provide insights into the underlying reasons for the declining quick ratio and help assess the company's overall liquidity position.
Peer comparison
Oct 31, 2023