American Airlines Group (AAL)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	804,000	578,000	440,000	273,000	245,000
Short-term investments	US$ in thousands	6,180,000	7,000,000	8,525,000	12,127,000	6,655,000
Total current liabilities	US$ in thousands	24,295,000	22,062,000	21,496,000	19,006,000	16,569,000
Cash ratio		0.29	0.34	0.42	0.65	0.42

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($804,000K + $6,180,000K) ÷ $24,295,000K
= 0.29

The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. Looking at American Airlines Group's cash ratio over the years, we see a fluctuating trend.

In 2020, the cash ratio was 0.42, indicating that the company had 42 cents in cash and cash equivalents for every dollar of current liabilities. This suggests a relatively weaker liquidity position.

By the end of 2021, the cash ratio improved to 0.65, indicating a higher level of liquidity, with 65 cents in cash available for every dollar of current liabilities. This uptick may reflect improved cash management or increased cash reserves.

However, in 2022, the cash ratio dropped back to 0.42, returning to the same level as in 2020. This decline suggests a potential increase in current liabilities relative to cash holdings.

The ratio further decreased in 2023 to 0.34, indicating a lower level of liquidity compared to the prior year. This decline may raise concerns about the company's ability to meet its short-term obligations.

By the end of 2024, the cash ratio fell to 0.29, the lowest level in the period analyzed. This decrease signals a potential liquidity strain, with only 29 cents in cash available for every dollar of current liabilities.

In summary, American Airlines Group's cash ratio has shown fluctuations over the years, with periods of improvement and decline in liquidity levels. It is essential for investors and stakeholders to monitor these ratios closely to assess the company's financial health and ability to meet its short-term obligations.