Southwest Airlines Company (LUV)

Current ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total current assets	US$ in thousands	13,955,000	14,808,000	18,036,000	15,173,000	5,974,000
Total current liabilities	US$ in thousands	12,256,000	10,378,000	9,164,000	7,506,000	8,952,000
Current ratio		1.14	1.43	1.97	2.02	0.67

December 31, 2023 calculation

Current ratio = Total current assets ÷ Total current liabilities
= $13,955,000K ÷ $12,256,000K
= 1.14

The current ratio of Southwest Airlines Co has been fluctuating over the past five years, indicating changes in the company's short-term liquidity and ability to meet its current obligations.

In 2019, the current ratio was 0.67, which was below 1, suggesting potential liquidity issues as the company may have had difficulty in paying off its short-term debts. However, there was a significant improvement in 2020 and 2021, with current ratios of 2.02 and 1.97 respectively. These ratios indicate that Southwest Airlines Co had significantly improved its ability to cover its current liabilities with its current assets.

The current ratio decreased in 2022 to 1.43 but was still above 1, indicating that the company had enough current assets to cover its short-term obligations. This decline may suggest a slight decrease in short-term liquidity compared to the previous year.

Further, in 2023, the current ratio decreased to 1.14, which could signal potential concerns about liquidity management. Although the ratio is still above 1, indicating that the company can meet its short-term obligations, the decreasing trend over the last two years may warrant further investigation into the company's short-term liquidity position.

Overall, the fluctuations in Southwest Airlines Co's current ratio suggest changes in the company's liquidity position over the years, and it would be important for stakeholders to monitor this ratio closely to assess the company's ability to meet its short-term financial obligations.