Allegiant Travel Company (ALGT)

Allegiant Travel's liquidity ratios have fluctuated over the past five years. The current ratio, a measure of short-term liquidity, has experienced a downward trend, decreasing from 2.02 in 2021 to 0.83 in 2023. This indicates that Allegiant Travel may be facing challenges in meeting its short-term obligations with its current assets.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a declining trend from 1.92 in 2021 to 0.78 in 2023. This suggests that Allegiant Travel may have difficulty meeting its short-term obligations without relying on inventory turnover.

The cash ratio, representing the ability to cover short-term liabilities with cash and cash equivalents, has also decreased over the years, from 1.83 in 2021 to 0.72 in 2023. This indicates that Allegiant Travel's cash position may be weakening, potentially impacting its ability to meet immediate financial obligations.

Overall, the declining trends in all three liquidity ratios suggest that Allegiant Travel may face increasing liquidity challenges, potentially leading to difficulties in meeting its short-term financial obligations in the future. The company may need to closely monitor and manage its liquidity position to ensure financial stability and operational continuity.

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Additional liquidity measure

The cash conversion cycle for Allegiant Travel has shown variability over the past five years. In 2023, the company's cash conversion cycle decreased to 10.29 days from 16.90 days in 2022, indicating an improvement in managing its working capital. This is a positive trend as a shorter cash conversion cycle suggests that Allegiant Travel is able to convert its inventory and receivables into cash more efficiently.

In 2021, the cash conversion cycle was 13.39 days, a slight increase from the previous year but still favorable compared to 2020 when it significantly increased to 70.86 days. The sharp increase in 2020 may be attributed to operational challenges or disruptions faced by the company during that period, affecting its ability to convert assets into cash.

Notably, in 2019, the cash conversion cycle was at its lowest at 5.06 days, indicating that Allegiant Travel was managing its working capital exceptionally well that year. Overall, the fluctuation in the cash conversion cycle over the years highlights the importance of efficient working capital management for Allegiant Travel to sustain its financial health and operational performance.