Sun Country Airlines Holdings Inc (SNCY)

The liquidity ratios of Sun Country Airlines Holdings Inc have been showing a declining trend over the past three years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased from 1.33 in 2021 to 0.65 in 2023. This indicates that the company's current assets may not be sufficient to cover its current liabilities, raising concerns about its short-term financial health.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also saw a decline from 1.28 in 2021 to 0.59 in 2023. This suggests that the company may struggle to pay off its current liabilities without relying on selling inventory.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, decreased from 1.18 in 2021 to 0.50 in 2023. This implies that Sun Country Airlines Holdings Inc has a lower proportion of cash on hand to cover its near-term obligations, which could potentially signal liquidity challenges.

Overall, the decreasing trend in all three liquidity ratios indicates that Sun Country Airlines Holdings Inc may be facing increasing liquidity risks and may need to closely manage its working capital and cash flows to ensure it can meet its short-term obligations. Further analysis of the company's cash management practices and strategies to improve liquidity may be warranted to address these concerns.

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Additional liquidity measure

The cash conversion cycle for Sun Country Airlines Holdings Inc decreased from 17.67 days in 2021 to 13.27 days in 2023, indicating an improvement in the company's efficiency in managing its working capital. This reduction suggests that Sun Country Airlines Holdings Inc has been able to convert its investments in inventory and accounts receivable into cash at a faster rate over the years.

A shorter cash conversion cycle is generally seen as a positive sign, as it implies that the company is able to collect cash from its customers more quickly, manage its inventory efficiently, and negotiate favorable credit terms with its suppliers.

The decreasing trend in the cash conversion cycle over the three-year period reflects potential enhancements in Sun Country Airlines Holdings Inc's operational efficiency and effectiveness in managing its resources to generate cash flows. It may also indicate improvements in the company's liquidity position and overall financial performance.