Tempur Sealy International Inc (TPX)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 74,900 | 69,400 | 300,700 | 65,000 | 64,900 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Receivables | US$ in thousands | 456,200 | 422,600 | 419,500 | 383,700 | 372,000 |
| Total current liabilities | US$ in thousands | 908,200 | 981,200 | 1,053,400 | 974,800 | 773,300 |
| Quick ratio | 0.58 | 0.50 | 0.68 | 0.46 | 0.56 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($74,900K
+ $—K
+ $456,200K)
÷ $908,200K
= 0.58
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 less than 1 indicates that a company may have difficulty paying off its current liabilities if they come due immediately.
Analyzing Tempur Sealy International Inc's quick ratio over the past five years, we observe fluctuations in the company's short-term liquidity position. The quick ratio has ranged from a low of 0.65 in 2022 to a high of 0.83 in 2019.
In 2023, the quick ratio stands at 0.68, implying that the company has $0.68 in quick assets for every $1 of current liabilities. This suggests that Tempur Sealy may face challenges in meeting its short-term obligations using its highly liquid assets alone.
The decreasing trend in the quick ratio from 0.83 in 2019 to 0.68 in 2023 raises concerns about the company's liquidity position over time. Investors and creditors may perceive a declining quick ratio as a red flag indicating potential liquidity risks for the company.
It would be prudent for Tempur Sealy International Inc to closely monitor and manage its liquidity position to ensure it can meet its short-term financial obligations effectively. Continuing to improve the quick ratio by either increasing quick assets or reducing current liabilities could enhance the company's financial health and resilience to economic uncertainties.
Peer comparison
Dec 31, 2023