SkyWest Inc (SKYW)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.90 | 1.17 | 0.89 | 1.04 | 0.82 |
| Quick ratio | 0.73 | 0.98 | 0.77 | 0.91 | 0.65 |
| Cash ratio | 0.67 | 0.89 | 0.72 | 0.88 | 0.56 |
The liquidity ratios of Skywest Inc. reflect its ability to meet short-term financial obligations effectively. The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has generally been declining from 2019 to 2023, indicating a potential worsening liquidity position. In 2023, the current ratio stands at 0.90, implying that the company may have difficulty meeting its short-term obligations with its current assets.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also shows a downward trend over the same period, further suggesting potential liquidity challenges for Skywest Inc. The quick ratio in 2023 is 0.80, indicating a lower level of immediate liquidity compared to the previous years.
Moreover, the cash ratio, which assesses the company's ability to cover its current liabilities with its cash and cash equivalents, also demonstrates a decreasing trend over the five-year period. In 2023, the cash ratio is 0.74, indicating a decreasing ability to settle immediate obligations solely with cash on hand.
In conclusion, Skywest Inc.'s liquidity ratios have been deteriorating over the past five years, as evidenced by the declining current ratio, quick ratio, and cash ratio. This trend raises concerns about the company's ability to meet its short-term financial obligations and may warrant further investigation into its liquidity management strategies.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -84.07 | -69.39 | -127.91 | -17.19 | -7.76 |
The cash conversion cycle of Skywest Inc. has fluctuated over the past five years. In 2023, the company's cash conversion cycle improved to 10.30 days from 12.21 days in 2022, indicating a more efficient management of cash flow and working capital. This trend continued from 2021, where the cycle was at 8.79 days, representing a positive change from the higher levels in 2020 and 2019 at 6.59 days and 11.56 days, respectively.
A lower cash conversion cycle suggests that the company is effectively managing its cash inflows and outflows, as well as its inventory and accounts receivable turnover. This ability to convert its resources into cash more quickly can lead to improved liquidity and financial performance for Skywest Inc. It is essential for the company to maintain this positive trend in the cash conversion cycle to ensure efficient operations and sustainable growth.