Alaska Air Group Inc (ALK)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 281,000 | 338,000 | 470,000 | 1,370,000 | 221,000 |
| Short-term investments | US$ in thousands | 1,510,000 | 2,079,000 | 2,646,000 | 1,976,000 | 1,300,000 |
| Receivables | US$ in thousands | 383,000 | 296,000 | 546,000 | 480,000 | 323,000 |
| Total current liabilities | US$ in thousands | 4,459,000 | 4,493,000 | 3,991,000 | 4,293,000 | 3,201,000 |
| Quick ratio | 0.49 | 0.60 | 0.92 | 0.89 | 0.58 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($281,000K
+ $1,510,000K
+ $383,000K)
÷ $4,459,000K
= 0.49
The quick ratio, also known as the acid-test ratio, measures a company's ability to cover its short-term liabilities with its most liquid assets. It is calculated by dividing quick assets (current assets excluding inventory) by current liabilities.
Looking at the historical trend of Alaska Air Group Inc.'s quick ratio from 2019 to 2023, we can observe the following:
1. In 2019, the quick ratio was 0.61, which indicates that the company had $0.61 of quick assets available to cover each $1 of current liabilities. This level suggests a relatively weak liquidity position.
2. The quick ratio improved in 2020 to 0.92, which indicates an increase in the company's ability to meet its short-term obligations using quick assets. This may have been due to better management of current assets and liabilities.
3. In 2021, the quick ratio significantly increased to 0.97, reflecting further improvement in the company's liquidity position. This could indicate that Alaska Air Group Inc. had enhanced its ability to cover short-term liabilities with liquid assets.
4. However, the quick ratio decreased in 2022 to 0.65, suggesting a decline in the company's ability to cover its short-term obligations using quick assets. This decline could be a cause for concern as it may indicate potential liquidity challenges.
5. This trend continued in 2023, with the quick ratio falling further to 0.58. A quick ratio below 1.0 may indicate a potential liquidity risk, as the company may struggle to meet its short-term obligations without relying on inventory or raising additional funds.
In conclusion, Alaska Air Group Inc.'s quick ratio has fluctuated over the past five years, with improvements in some years and declines in others. Investors and stakeholders should closely monitor the company's liquidity position, particularly its ability to cover short-term liabilities with highly liquid assets, to assess its financial health and risk exposure.
Peer comparison
Dec 31, 2023