Gogo Inc (GOGO)

Gogo Inc's liquidity ratios reflect the company's ability to meet its short-term obligations with its current assets. The current ratio has shown consistent improvement over the years, increasing from 1.68 in 2019 to 4.37 in 2023. This indicates a strengthening liquidity position, with the company having more than enough current assets to cover its current liabilities.

Similarly, the quick ratio, which excludes inventory from current assets, has also shown a positive trend, increasing from 1.22 in 2019 to 3.49 in 2023. This suggests that Gogo Inc can meet its immediate liabilities without relying on inventory for liquidity.

Furthermore, the cash ratio, which provides a more stringent measure of liquidity by only considering cash and cash equivalents, has also demonstrated improvement over the years. The cash ratio has increased from 0.81 in 2019 to 2.57 in 2023, indicating the company's enhanced ability to settle its short-term obligations solely with its cash reserves.

Overall, Gogo Inc's liquidity ratios show a favorable liquidity position, with increasing ratios indicating a strengthening ability to meet short-term obligations. A high current, quick, and cash ratio is generally positive, as it signifies a lower risk of financial distress due to insufficient liquidity.

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Additional liquidity measure

The cash conversion cycle (CCC) of Gogo Inc has shown some fluctuations over the past five years.

In 2023, the CCC increased to 190.35 days from 145.25 days in 2022, indicating that the company took longer to convert its investments in inventory into cash during the year. This may be a concern as a longer CCC can tie up cash flow and may indicate inefficiencies in managing inventory, accounts receivable, and accounts payable.

In 2021, the CCC improved to 121.84 days from 127.88 days in 2020, showing that the company was able to shorten its cycle and convert resources into cash more efficiently. This may suggest better inventory management practices or improved collection of receivables.

Comparing the latest CCC to 2019, there has been an increase from 128.63 days to 190.35 days, indicating a downward trend in the efficiency of Gogo Inc's cash conversion cycle. This trend warrants further investigation into the company's operational efficiency and financial health.

Overall, fluctuations in the CCC of Gogo Inc over the years demonstrate varying levels of efficiency in managing cash flow and working capital components. It is essential for the company to closely monitor its cash conversion cycle to ensure optimal use of resources and maintain healthy liquidity levels.