The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. It is calculated as a company's Total Current Assets excludes Total Inventories divides by its Total Current Liabilities. ARM Holdings's quick ratio for the quarter that ended in Mar. 2024 was 2.79.
ARM Holdings has a quick ratio of 2.79. It generally indicates good short-term financial strength.
The historical rank and industry rank for ARM Holdings's Quick Ratio or its related term are showing as below:
ARM'
s Quick Ratio Range Over the Past 10 Years
Min: 2.22 Med: 2.6 Max: 2.79
Current: 2.79
During the past 4 years, ARM Holdings's highest Quick Ratio was 2.79. The lowest was 2.22. And the median was 2.60.
ARM's Quick Ratio is ranked better than 68.24% of 998
companies
in the Semiconductors industry
Industry Median: 1.82
vs ARM: 2.79
ARM Holdings Quick Ratio Historical Data
The historical data trend for ARM Holdings's Quick Ratio can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Competitive Comparison of ARM Holdings's Quick Ratio
For the Semiconductors subindustry, ARM Holdings's Quick Ratio, along with its competitors' market caps and Quick Ratio data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
ARM Holdings's Quick Ratio Distribution in the Semiconductors Industry
For the Semiconductors industry and Technology sector, ARM Holdings's Quick Ratio distribution charts can be found below:
* The bar in red indicates where ARM Holdings's Quick Ratio falls into.
ARM Holdings Quick Ratio Calculation
The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. For this reason, the ratio excludes inventories from current assets.
ARM Holdings's Quick Ratio for the fiscal year that ended in Mar. 2024 is calculated as
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
ARM Holdings (NAS:ARM) Quick Ratio Explanation
The quick ratio is more conservative than the Current Ratio because it excludes inventories from current assets. The ratio derives its name presumably from the fact that assets such as cash and marketable securities are quick sources of cash. Inventories generally take time to be converted into cash, and if they have to be sold quickly, the company may have to accept a lower price than book value of these inventories. As a result, they are justifiably excluded from assets that are ready sources of immediate cash.
In general, low or decreasing quick ratios generally suggest that a company is over-leveraged, struggling to maintain or grow sales, paying bills too quickly or collecting receivables too slowly. On the other hand, a high or increasing quick ratio generally indicates that a company is experiencing solid top-line growth, quickly converting receivables into cash, and easily able to cover its financial obligations. Such companies often have faster inventory turnover and cash conversion cycles.
The higher the quick ratio, the better the company's liquidity position.
ARM Holdings Quick Ratio Related Terms
Thank you for viewing the detailed overview of ARM Holdings's Quick Ratio provided by GuruFocus.com. Please click on the following links to see related term pages.
Arm Holdings is the IP owner and developer of the ARM architecture (ARM stands for Acorn RISC Machine), which is used in 99% of the world's smartphone CPU cores, and it also has high market share in other battery-powered devices like wearables, tablets, or sensors. Arm licenses its architecture for a fee, offering different types of licenses depending on the flexibility the customer needs. Customers like Apple or Qualcomm buy architectural licenses, which allows them to modify the architecture and add or delete instructions to tailor the chips to their specific needs. Other clients directly buy off-the-shelf designs from Arm. Both off-the-shelf and architectural customers pay a royalty fee per chip shipped.
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