AAR Corp (AIR)
Liquidity ratios
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.98 | 3.12 | 2.89 | 2.78 | 3.76 |
| Quick ratio | 0.80 | 0.88 | 0.77 | 0.65 | 1.51 |
| Cash ratio | 0.18 | 0.19 | 0.15 | 0.15 | 1.06 |
AAR Corp's liquidity ratios have shown fluctuations over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has generally remained above 2, indicating a healthy liquidity position. However, there was a slight decrease from 3.76 in 2020 to 2.98 in 2024.
The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also exhibited variability. While it has consistently been below 1, signaling a potential challenge in meeting short-term obligations without relying on inventory sales, the ratio improved from 0.65 in 2021 to 0.88 in 2023 before declining to 0.80 in 2024.
The cash ratio, representing the proportion of current liabilities that could be covered by cash and cash equivalents alone, presents a more concerning trend. A significant drop from 1.06 in 2020 to 0.18 in 2024 suggests a decrease in the company's ability to meet its obligations purely from its cash reserves.
Overall, AAR Corp's liquidity ratios indicate a generally sound liquidity position, with room for improvement in managing short-term obligations and increasing cash reserves to enhance financial flexibility and risk management.
Additional liquidity measure
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 128.39 | 696.42 | 740.62 | 818.00 | 697.78 |
The cash conversion cycle of AAR Corp has shown significant fluctuations over the past five years. In 2020, the company's cash conversion cycle was 697.78 days, which improved to 818.00 days in 2021 before decreasing to 740.62 days in 2022. However, there was a sharp decline in 2023, with the cash conversion cycle falling to 696.42 days. The most recent data in 2024 indicates a further improvement in the cash conversion cycle to 128.39 days, signaling a more efficient management of cash flows and working capital.
Overall, the trend suggests that AAR Corp has made progress in managing its cash conversion cycle, which is a positive indicator of the company's ability to efficiently convert its investments in inventory and accounts receivable into cash. This improvement can lead to better liquidity and financial stability for the company in the long run.