Southwest Airlines Company (LUV)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 9,288,000 | 9,492,000 | 12,480,000 | 11,063,000 | 2,548,000 |
| Short-term investments | US$ in thousands | 2,186,000 | 2,800,000 | 3,024,000 | 2,271,000 | 1,524,000 |
| Total current liabilities | US$ in thousands | 12,256,000 | 10,378,000 | 9,164,000 | 7,506,000 | 8,952,000 |
| Cash ratio | 0.94 | 1.18 | 1.69 | 1.78 | 0.45 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($9,288,000K
+ $2,186,000K)
÷ $12,256,000K
= 0.94
The cash ratio of Southwest Airlines Co has shown fluctuations over the past five years. In 2023, the cash ratio stood at 0.98, indicating that the company had $0.98 in cash and cash equivalents for every dollar of current liabilities. This ratio has decreased compared to the previous year, where it was 1.25. While the cash ratio was higher in 2021 and 2020 at 1.76 and 1.82 respectively, it dropped significantly in 2019 to 0.49.
A cash ratio below 1 may suggest that Southwest Airlines Co may have difficulty meeting its short-term obligations solely through cash and cash equivalents. It is important for the company to monitor and manage its liquidity position effectively to ensure it can cover its short-term liabilities as they come due. Further analysis of the company's cash flows and liquidity management practices would provide a more comprehensive understanding of its ability to handle its financial obligations.
Peer comparison
Dec 31, 2023