Southwest Airlines Company (LUV)
Quick ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | 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 |
| Receivables | US$ in thousands | 178,000 | 337,000 | 326,000 | 784,000 | 775,000 |
| Total current liabilities | US$ in thousands | 12,276,000 | 12,256,000 | 10,378,000 | 9,164,000 | 7,506,000 |
| Quick ratio | 0.73 | 0.96 | 1.22 | 1.78 | 1.88 |
December 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($7,509,000K
+ $1,216,000K
+ $178,000K)
÷ $12,276,000K
= 0.73
The quick ratio of Southwest Airlines Company has shown a gradual decline over the five-year period from December 31, 2020, to December 31, 2024. Starting at a healthy level of 1.88 in 2020, the quick ratio decreased to 0.73 by the end of 2024.
A quick ratio above 1 indicates that the company has an acceptable level of liquidity to cover its short-term liabilities without having to rely on inventory sales. However, the decreasing trend observed in Southwest Airlines Company's quick ratio signals a potential deterioration in its ability to meet its short-term obligations using its most liquid assets.
It is important for stakeholders to monitor this trend closely as a quick ratio below 1 may raise concerns about the company's liquidity position and its ability to address short-term financial obligations promptly. Further analysis and investigation into the factors contributing to this decline in the quick ratio are warranted to assess the company's overall financial health and risk exposure.
Peer comparison
Dec 31, 2024