Alaska Air Group Inc (ALK)

The liquidity ratios of Alaska Air Group Inc. show fluctuations over the past 5 years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has decreased from 0.64 in 2019 to 0.61 in 2023. This indicates a weakening liquidity position, as the company may face challenges in meeting its immediate obligations.

Similarly, the quick ratio, which provides a more stringent measure by excluding inventory from current assets, has also declined from 0.61 in 2019 to 0.58 in 2023. This shows that the company may have difficulty in meeting its short-term obligations without relying on inventory.

The cash ratio, which represents the company's ability to cover short-term liabilities with its cash and cash equivalents, has also exhibited a decreasing trend from 0.51 in 2019 to 0.49 in 2023. This suggests that Alaska Air Group Inc. may have limited cash reserves to meet its short-term obligations, raising concerns about its liquidity position.

Overall, the liquidity ratios of Alaska Air Group Inc. indicate a deteriorating liquidity position over the past years, which may imply potential challenges in managing short-term financial obligations and cash flow constraints. It would be important for the company to closely monitor its liquidity position and take necessary steps to improve it in order to safeguard its financial stability.

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Additional liquidity measure

The cash conversion cycle measures the efficiency of a company in managing its working capital, specifically focusing on the time it takes to convert its investments in inventory and accounts receivable into cash. Using the data provided for Alaska Air Group Inc., we observe fluctuations in the cash conversion cycle over the past five years.

In 2023, the cash conversion cycle for Alaska Air Group Inc. stood at 13.41 days, representing a slight increase from the previous year but still indicating a relatively efficient conversion of inventory and accounts receivable into cash. This improvement suggests that the company managed its working capital more effectively compared to the prior period.

In 2022, the cash conversion cycle decreased to 11.20 days, reflecting an improvement in the efficiency of the company's operations in converting its working capital into cash. This reduction indicates that Alaska Air Group Inc. may have streamlined its processes for managing inventory and collecting receivables during this period.

In 2021, the cash conversion cycle increased significantly to 32.27 days, signaling a potential strain on the company's liquidity and working capital management. The extended cash conversion cycle during this year suggests that Alaska Air Group Inc. may have faced challenges in converting its investments in inventory and accounts receivable into cash promptly.

In 2020, the cash conversion cycle further increased to 49.13 days, reaching its highest point in the past five years. This prolonged cycle indicates that Alaska Air Group Inc. struggled with managing its working capital efficiently, potentially leading to increased liquidity risks and operational challenges during this period.

In 2019, the cash conversion cycle was relatively stable at 13.43 days, indicating a similar level of efficiency in working capital management as observed in 2023. This consistency suggests that Alaska Air Group Inc. maintained a relatively optimal balance between managing its inventory, receivables, and cash conversion processes.

Overall, the trend in Alaska Air Group Inc.'s cash conversion cycle demonstrates fluctuations in working capital efficiency over the past five years, with improvements in some years and challenges in others. Monitoring and analyzing this metric can provide valuable insights into the company's liquidity management and operational effectiveness.