Southwest Airlines Company (LUV)
Cash ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 7,509,000 | 9,288,000 | 9,492,000 | 12,480,000 | 11,063,000 |
| Short-term investments | US$ in thousands | 1,216,000 | 2,186,000 | 2,800,000 | 3,024,000 | 2,271,000 |
| Total current liabilities | US$ in thousands | 12,276,000 | 12,256,000 | 10,378,000 | 9,164,000 | 7,506,000 |
| Cash ratio | 0.71 | 0.94 | 1.18 | 1.69 | 1.78 |
December 31, 2024 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($7,509,000K
+ $1,216,000K)
÷ $12,276,000K
= 0.71
The cash ratio represents the proportion of a company's current assets that are in cash or cash equivalents, providing insight into its liquidity and ability to cover short-term liabilities.
Southwest Airlines Company's cash ratio has shown a declining trend over the years, starting at 1.78 on December 31, 2020, and decreasing to 0.71 on December 31, 2024. This indicates a decreasing ability to meet short-term obligations solely with cash on hand.
The decreasing cash ratio could be a point of concern as it suggests a potential strain on liquidity. It may indicate that Southwest Airlines Company's cash position has weakened relative to its short-term obligations, and could limit its financial flexibility in managing unforeseen expenses or emergencies.
It would be prudent for Southwest Airlines Company to closely monitor its cash management strategies and explore avenues to improve its liquidity position to ensure it can readily meet its short-term financial obligations.
Peer comparison
Dec 31, 2024