Quick Ratio

The quick ratio measures a company’s ability to cover its short-term liabilities using its most liquid assets (cash, marketable securities, receivables), excluding inventory.

LI’s current quick ratio of 0.76x sits just above the Consumer Cyclical sector median of 0.71x, placing it in the 58th percentile among peers. Over the last eight quarters the metric has been decreasing, with a year-over-year change not available and a quarter-over-quarter drop of -54.2% (from 1.66x to 0.76x). This combination—a level only slightly above the sector median paired with a sharp, rapid decline—indicates that LI’s liquidity buffer is eroding quickly, raising near-term financial risk. The trend contradicts any temporary advantage the 0.76x level might suggest, as the pace of deterioration outpaces typical peer movements. This supports the overall CAUTIOUS verdict, because declining liquidity heightens vulnerability to cash-flow shortfalls even if the current ratio is not yet below average.

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