Watsco Inc (WSO)
Current ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total current assets | US$ in thousands | 2,391,930 | 2,298,740 | 1,961,400 | 1,484,440 | 1,546,730 |
| Total current liabilities | US$ in thousands | 712,012 | 906,522 | 726,722 | 487,145 | 461,717 |
| Current ratio | 3.36 | 2.54 | 2.70 | 3.05 | 3.35 |
December 31, 2023 calculation
Current ratio = Total current assets ÷ Total current liabilities
= $2,391,930K ÷ $712,012K
= 3.36
The current ratio of Watsco Inc. has shown fluctuations over the past five years, ranging from 2.54 to 3.36. A current ratio above 1 indicates that the company has more current assets than current liabilities, which is generally seen as favorable.
In 2023, Watsco Inc. had a current ratio of 3.36, the highest among the observed years. This implies that the company had $3.36 in current assets for every dollar of current liabilities, indicating a strong liquidity position. Having a current ratio above 3 suggests that the company is comfortably able to meet its short-term obligations using its current assets.
In 2022 and 2021, the current ratio decreased to 2.54 and 2.70, respectively. Although these ratios are still above 2, indicating an adequate liquidity position, the decline raises some concerns about the company's ability to cover its short-term liabilities.
In 2020 and 2019, the current ratio improved to 3.05 and 3.35, respectively. These ratios suggest that Watsco Inc. had strengthened its liquidity position in those years compared to 2022 and 2021.
Overall, the trend in Watsco Inc.'s current ratio indicates some variability in its short-term liquidity position over the years. Potential investors and stakeholders may want to further investigate the factors contributing to these fluctuations to assess the company's ability to manage its short-term obligations effectively.