SkyWest Inc (SKYW)

Based on the provided data, the liquidity ratios of SkyWest Inc over the years show varying levels of liquidity and ability to meet short-term obligations:

1. Current Ratio:
- The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, fluctuated over the years.
- It decreased from 1.04 in 2020 to 0.89 in 2021, indicating a slight weakening of liquidity.
- However, in 2022, the current ratio improved to 1.17, suggesting better short-term liquidity.
- It then dropped to 0.90 in 2023 and further to 0.78 in 2024, potentially signaling potential liquidity challenges in meeting current obligations.

2. Quick Ratio:
- The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, followed a similar pattern to the current ratio.
- It declined from 0.91 in 2020 to 0.77 in 2021, indicating reduced ability to cover immediate liabilities.
- In 2022, the quick ratio improved to 0.98, suggesting enhanced liquidity in the short term.
- However, it dropped to 0.73 in 2023 and further to 0.65 in 2024, potentially indicating a tighter liquidity position.

3. Cash Ratio:
- The cash ratio, which measures the company's ability to cover short-term liabilities with its cash and cash equivalents, also showed fluctuating trends.
- It decreased from 0.88 in 2020 to 0.72 in 2021, reflecting a reduced ability to cover obligations with cash.
- In 2022, the cash ratio increased to 0.89, suggesting better liquidity in terms of cash holdings.
- However, it declined to 0.67 in 2023 and further to 0.56 in 2024, potentially indicating potential cash flow challenges in meeting short-term commitments.

Overall, the liquidity ratios of SkyWest Inc highlight a mixed picture, with fluctuations in liquidity levels over the years. It is essential for the company to closely monitor its liquidity position to ensure it can meet its short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle of SkyWest Inc has shown significant fluctuations over the past five years. In December 2020, the company had a negative cash conversion cycle of -17.19 days, indicating that it was able to convert its inventory into cash quickly. However, by December 2021, the cash conversion cycle deteriorated significantly to -127.91 days, suggesting that the company took longer to convert its inventory into cash and pay its suppliers.

In December 2022, there was a slight improvement in the cash conversion cycle, which reduced to -69.39 days. However, in the subsequent years, the cash conversion cycle increased further to -84.07 days in December 2023, and then turned positive to 47.19 days in December 2024. This positive value indicates that the company took longer to convert its inventory into cash and manage its working capital effectively.

Overall, the fluctuating trend in SkyWest Inc's cash conversion cycle over the years signals potential challenges in managing its inventory, receivables, and payables efficiently. The company may need to focus on optimizing its working capital management to ensure a more stable and favorable cash conversion cycle in the future.