Allegiant Travel Company (ALGT)

Quick ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash	US$ in thousands	285,892	143,259	229,989	363,378	152,764
Short-term investments	US$ in thousands	495,234	671,414	725,063	819,478	532,477
Receivables	US$ in thousands	90,407	70,743	106,578	62,659	192,215
Total current liabilities	US$ in thousands	1,277,400	1,199,560	869,831	663,045	689,345
Quick ratio		0.68	0.74	1.22	1.88	1.27

December 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($285,892K + $495,234K + $90,407K) ÷ $1,277,400K
= 0.68

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets.

Analyzing Allegiant Travel Company's quick ratio over the past five years, we observe fluctuations in the ratio. As of December 31, 2020, the quick ratio stood at 1.27, indicating that Allegiant had $1.27 in liquid assets available to cover each dollar of its current liabilities, providing a solid cushion for meeting short-term obligations.

By December 31, 2021, the quick ratio improved to 1.88, signaling an increase in liquidity and strengthened ability to cover short-term liabilities. This suggests Allegiant may have enhanced its cash reserves or reduced its current liabilities during this period.

However, the quick ratio decreased to 1.22 by December 31, 2022, which still indicates a comfortable level of liquidity albeit not as strong as the previous year. It is important for Allegiant to monitor this trend closely to ensure adequate liquidity for short-term obligations.

As of December 31, 2023, the quick ratio dropped significantly to 0.74, below the ideal threshold of 1. This implies that Allegiant may be facing challenges in meeting its short-term obligations with its current liquid assets, and may need to assess its liquidity management strategies.

Furthermore, by December 31, 2024, the quick ratio declined further to 0.68, continuing the downward trend in liquidity. This suggests potential liquidity constraints for Allegiant, raising concerns about its ability to cover short-term liabilities using available liquid assets.

In conclusion, Allegiant Travel Company's quick ratio has shown fluctuations over the past five years, with a general decreasing trend. It is important for Allegiant to closely monitor its liquidity position and take appropriate measures to ensure sufficient liquid assets are available to meet its short-term obligations effectively.