American Airlines Group (AAL)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.62 | 0.69 | 0.75 | 0.72 | 0.71 | 0.79 | 0.81 | 0.81 | 0.91 | 1.01 | 1.05 | 1.04 | 0.67 | 0.74 | 0.77 | 0.37 | 0.45 | 0.49 | 0.49 | 0.44 |
| Quick ratio | 0.44 | 0.52 | 0.58 | 0.55 | 0.52 | 0.60 | 0.63 | 0.64 | 0.73 | 0.84 | 0.89 | 0.87 | 0.50 | 0.57 | 0.59 | 0.24 | 0.30 | 0.36 | 0.37 | 0.31 |
| Cash ratio | 0.34 | 0.43 | 0.50 | 0.47 | 0.42 | 0.51 | 0.55 | 0.57 | 0.65 | 0.77 | 0.83 | 0.81 | 0.42 | 0.50 | 0.55 | 0.19 | 0.21 | 0.26 | 0.27 | 0.22 |
The liquidity ratios of American Airlines Group Inc, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term financial obligations.
The current ratio measures the company's ability to pay off its current liabilities using its current assets. A higher current ratio is generally preferred as it indicates a stronger ability to meet short-term obligations. American Airlines' current ratio has been fluctuating over the quarters, ranging from 0.62 to 0.81. The decreasing trend indicates a potential liquidity concern, and the ratio consistently below 1 suggests that the company may have difficulty in meeting its short-term obligations with its current assets alone.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. This ratio gives a better indication of the immediate liquidity position of the company. American Airlines' quick ratio has also been showing a declining trend, ranging from 0.47 to 0.68. The decreasing quick ratio can imply that the company may face challenges in meeting its short-term obligations without relying on inventory.
The cash ratio is the most conservative liquidity ratio, focusing solely on cash and cash equivalents to cover current liabilities. American Airlines' cash ratio has been decreasing from 0.37 to 0.61. While the cash ratio is generally lower compared to other liquidity ratios, a decreasing trend can indicate potential liquidity constraints.
In conclusion, based on the liquidity ratios analyzed, American Airlines Group Inc may be experiencing challenges in meeting its short-term financial obligations. The declining trends in the current ratio, quick ratio, and cash ratio suggest a potential liquidity strain that the company needs to address to ensure financial stability.
See also:
American Airlines Group Liquidity Ratios (Quarterly Data)
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 15.18 | 18.08 | 13.60 | 12.97 | 17.97 | 17.85 | 11.85 | 10.00 | 19.89 | 21.26 | 19.48 | 30.53 | 37.11 | 29.91 | 19.33 | 10.79 | 10.57 | 12.88 | 8.95 | 7.40 |
The cash conversion cycle for American Airlines Group Inc has shown a slight fluctuation over the past eight quarters, ranging from 13.89 days to 16.45 days. The company's efficiency in managing its cash flows and working capital has been relatively consistent, with Q1 2023 and Q3 2023 displaying the lowest cash conversion cycles at 13.89 days and 13.94 days, respectively.
A lower cash conversion cycle indicates that American Airlines Group Inc is able to efficiently convert its investments in inventory and accounts receivable into cash, thus optimizing its liquidity and operational efficiency. On the other hand, the higher cash conversion cycles in Q4 2022 and Q2 2022 at 15.94 days and 16.45 days suggest a potential delay in the conversion of investments into cash, which may require further analysis to identify underlying reasons.
Overall, the trend in American Airlines Group Inc's cash conversion cycle suggests a generally stable performance in managing its working capital and cash flow operations. Further monitoring of this metric will be crucial to ensure continued efficiency in the company's financial management practices.