Southwest Airlines Company (LUV)
Current ratio
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total current assets | US$ in thousands | 13,955,000 | 14,631,000 | 14,661,000 | 14,274,000 | 14,808,000 | 16,418,000 | 19,396,000 | 18,822,000 | 18,036,000 | 18,554,000 | 19,188,000 | 16,100,000 | 15,173,000 | 16,133,000 | 15,872,000 | 7,028,000 | 5,974,000 | 5,650,000 | 5,554,000 | 5,483,000 |
| Total current liabilities | US$ in thousands | 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 | 8,952,000 | 8,629,000 | 8,611,000 | 8,723,000 |
| Current ratio | 1.14 | 1.21 | 1.25 | 1.26 | 1.43 | 1.58 | 1.66 | 1.87 | 1.97 | 2.03 | 1.54 | 1.97 | 2.02 | 2.07 | 1.70 | 0.69 | 0.67 | 0.65 | 0.64 | 0.63 |
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 shown a declining trend over the past eight quarters, indicating a potential weakening in the company's liquidity position. The ratio decreased from 1.87 in Q1 2022 to 1.14 in Q4 2023.
A current ratio below 1 typically indicates the company may have difficulty covering its short-term obligations with its current assets. While Southwest Airlines' current ratio has remained above 1 in all quarters, the downward movement suggests a decreasing ability to meet its short-term liabilities with its current assets.
It is essential for the company to closely monitor and manage its liquidity position to ensure it has enough current assets to cover its current liabilities, especially in the airline industry which is susceptible to external factors impacting cash flows. Further analysis of the company's current assets and liabilities is necessary to assess the underlying reasons for the decreasing current ratio and to formulate appropriate strategies to improve liquidity management.
Peer comparison
Dec 31, 2023