Southwest Airlines Company (LUV)

Cash ratio

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Cash and cash equivalents US$ in thousands 7,509,000 8,503,000 8,142,000 8,367,000 9,288,000 9,497,000 9,158,000 8,359,000 9,492,000 10,443,000 13,234,000 13,098,000 12,480,000 12,980,000 14,124,000 11,971,000 11,063,000 12,109,000 12,351,000 3,940,000
Short-term investments US$ in thousands 1,216,000 879,000 1,860,000 2,145,000 2,186,000 2,236,000 3,021,000 3,315,000 2,800,000 3,230,000 3,197,000 2,642,000 3,024,000 3,024,000 2,751,000 2,377,000 2,271,000 2,453,000 2,106,000 1,605,000
Total current liabilities US$ in thousands 12,276,000 13,489,000 14,113,000 12,225,000 12,256,000 12,112,000 11,728,000 11,329,000 10,378,000 10,416,000 11,711,000 10,069,000 9,164,000 9,135,000 12,476,000 8,182,000 7,506,000 7,804,000 9,361,000 10,241,000
Cash ratio 0.71 0.70 0.71 0.86 0.94 0.97 1.04 1.03 1.18 1.31 1.40 1.56 1.69 1.75 1.35 1.75 1.78 1.87 1.54 0.54

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 of Southwest Airlines Company has shown a declining trend over the past few years, starting at 0.54 on March 31, 2020, and gradually decreasing to 0.71 by December 31, 2024. This indicates that the company's ability to cover its short-term liabilities with its available cash and cash equivalents has weakened over time. A higher cash ratio is generally preferred as it suggests a healthier liquidity position. It is important for Southwest Airlines to closely monitor and manage its liquidity levels to ensure it can meet its financial obligations efficiently.