Watsco Inc (WSO)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 210,112 | 147,505 | 118,268 | 146,067 | 74,454 |
| Short-term investments | US$ in thousands | — | — | — | 6,065 | — |
| Receivables | US$ in thousands | 797,832 | 747,110 | 698,456 | 535,288 | 533,810 |
| Total current liabilities | US$ in thousands | 712,012 | 906,522 | 726,722 | 487,145 | 461,717 |
| Quick ratio | 1.42 | 0.99 | 1.12 | 1.41 | 1.32 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($210,112K
+ $—K
+ $797,832K)
÷ $712,012K
= 1.42
The quick ratio of Watsco Inc. has varied over the past five years, ranging from 1.02 to 1.47. A quick ratio above 1 indicates that the company has sufficient liquid assets to cover its short-term liabilities.
In 2023, the quick ratio of 1.47 suggests that Watsco Inc. had $1.47 of liquid assets available to cover each dollar of its current liabilities. This indicates a strong liquidity position, which may be attributed to efficient management of current assets such as cash, marketable securities, and accounts receivable.
The decrease in the quick ratio from 2020 to 2022 might raise some concerns as it dropped to 1.02, slightly above the minimum threshold of 1. However, the ratio improved in 2023, indicating a positive trend towards better liquidity management.
Overall, while the variations in the quick ratio over the years indicate some fluctuations in the company's liquidity position, the current ratio of 1.47 in 2023 suggests that Watsco Inc. continues to maintain a relatively strong liquidity position to meet its short-term obligations.