Quick Ratio

The quick ratio measures a company's ability to pay its short-term debts using its most liquid assets, like cash and receivables, without relying on inventory.

American Water Works has a quick ratio of 0.26x, meaning it holds only $0.26 in liquid assets for every $1 of current liabilities — well below the utilities sector median of 0.50x, placing it in the 18th percentile among peers. This metric has been perfectly stable over the past eight quarters, with a year-over-year change of +0.0% and a quarter-over-quarter change of +0.0%. A low quick ratio that is not improving suggests the company consistently relies on cash flow or external financing to meet near-term obligations, which introduces liquidity risk but is common in capital-intensive utilities. The combination of a persistently low level and flat trend reinforces that this metric does not signal a near-term improvement in liquidity. This analysis supports the overall NEUTRAL verdict, as the quick ratio highlights a structural weakness that is offset by the stable, predictable nature of the utility business.

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