AAR Corp (AIR)

Liquidity ratios

May 31, 2024 Feb 29, 2024 Nov 30, 2023 Aug 31, 2023 May 31, 2023 Feb 28, 2023 Nov 30, 2022 Aug 31, 2022 May 31, 2022 Feb 28, 2022 Nov 30, 2021 Aug 31, 2021 May 31, 2021 Feb 28, 2021 Nov 30, 2020 Aug 31, 2020 May 31, 2020 Feb 29, 2020 Nov 30, 2019 Aug 31, 2019
Current ratio 2.98 2.90 3.14 3.07 3.12 3.22 3.28 2.89 2.89 2.85 2.96 2.91 2.78 2.65 2.55 2.72 3.76 2.39 2.64 2.58
Quick ratio 0.80 0.76 0.82 0.89 0.88 0.88 0.85 0.74 0.77 0.73 0.73 0.71 0.65 0.74 0.69 0.70 1.51 0.54 0.61 0.60
Cash ratio 0.18 0.16 0.17 0.18 0.19 0.16 0.15 0.12 0.15 0.12 0.13 0.15 0.15 0.26 0.27 0.27 1.06 0.08 0.09 0.10

AAR Corp's liquidity ratios show fluctuations over the periods analyzed. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, ranged from 2.55 to 3.28. This indicates that the company generally maintains a strong ability to meet its short-term liabilities with its current assets, although there was some variability in this ability over time.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, ranged from 0.54 to 1.51. This indicates that AAR Corp may face some challenges in meeting its short-term obligations without relying on inventory in certain periods. However, the company's ability to cover immediate liabilities improved in some periods compared to others.

The cash ratio, which assesses the company's ability to cover current liabilities with its cash and cash equivalents, varied from 0.08 to 0.27. This ratio indicates that AAR Corp may have a lower capacity to cover short-term obligations with cash alone, with some periods showing stronger cash reserves relative to immediate liabilities.

Overall, while AAR Corp's current ratio suggests good overall liquidity, the quick and cash ratios reveal fluctuations in the company's ability to meet short-term obligations without relying on inventory or with cash reserves alone. Further analysis would be needed to understand the specific factors driving these fluctuations and their potential implications for the company's financial health.

Additional liquidity measure

May 31, 2024 Feb 29, 2024 Nov 30, 2023 Aug 31, 2023 May 31, 2023 Feb 28, 2023 Nov 30, 2022 Aug 31, 2022 May 31, 2022 Feb 28, 2022 Nov 30, 2021 Aug 31, 2021 May 31, 2021 Feb 28, 2021 Nov 30, 2020 Aug 31, 2020 May 31, 2020 Feb 29, 2020 Nov 30, 2019 Aug 31, 2019
Cash conversion cycle days 128.47 140.87 178.25 250.07 696.42 742.34 807.59 726.50 742.66 761.70 797.95 761.95 822.88 1,028.14 948.80 938.62 872.47 202.53 137.90 109.72

The cash conversion cycle of AAR Corp has shown fluctuations over the past few quarters. The company's cash conversion cycle, which represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, significantly improved from 2019 to mid-2020. However, there was a significant deterioration in the cycle in mid-2020 followed by a steep increase and volatility until mid-2023.

From mid-2023 to mid-2024, there was a general decreasing trend in the cash conversion cycle, indicating that the company may have become more efficient in managing its working capital. The cycle was at its lowest in May 2024, at 128.47 days, suggesting that the company was able to better manage its inventory, accounts receivable, and accounts payable during that period.

Overall, AAR Corp's recent downward trend in the cash conversion cycle is a positive indication of the company's ability to efficiently manage its working capital and generate cash flows from its operations. This improvement may be attributed to better inventory management, effective accounts receivable collections, and optimized accounts payable processes. It will be important for the company to sustain this improved efficiency in the management of its cash conversion cycle to support its financial health and operational effectiveness in the future.