Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
American Airlines Group Inc., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | 0.62 | 0.71 | 0.91 | 0.67 | 0.45 | |
| Quick ratio | 0.48 | 0.56 | 0.79 | 0.53 | 0.31 | |
| Cash ratio | 0.38 | 0.46 | 0.71 | 0.45 | 0.22 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The liquidity profile exhibits a distinct bell-shaped trajectory over the five-year period, characterized by a steady accumulation of liquidity peaking in 2021, followed by a consistent decline through 2023. Across all evaluated metrics, the values remained below 1.0, indicating that current liabilities consistently exceeded current assets throughout the entire duration.
- Current Ratio
- An upward trend is observed from 2019 to 2021, where the ratio increased from 0.45 to a peak of 0.91. This improvement was followed by a contraction over the subsequent two years, ending at 0.62 in 2023. The persistent sub-1.0 level suggests a continuous reliance on short-term financing or operational cash flow to meet immediate obligations.
- Quick Ratio
- The quick ratio mirrored the movement of the current ratio, rising from 0.31 in 2019 to 0.79 in 2021 before retreating to 0.48 by 2023. The narrow gap between the current and quick ratios indicates that inventory represents a minimal component of the total current assets.
- Cash Ratio
- A significant surge in cash liquidity is evident between 2019 and 2021, with the ratio rising from 0.22 to 0.71. A subsequent decline occurred in 2022 and 2023, closing at 0.38. The high correlation between the cash ratio and the other liquidity metrics suggests that fluctuations in cash and cash equivalents were the primary drivers of the overall liquidity volatility during this period.
AI Ask an analyst for more
Current Ratio
American Airlines Group Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 13,572) | 15,269) | 17,336) | 11,095) | 8,206) | |
| Current liabilities | 22,062) | 21,496) | 19,006) | 16,569) | 18,311) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 0.62 | 0.71 | 0.91 | 0.67 | 0.45 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| FedEx Corp. | 1.37 | 1.43 | 1.51 | — | — | |
| Uber Technologies Inc. | 1.19 | 1.04 | 0.98 | — | — | |
| Union Pacific Corp. | 0.81 | 0.72 | 0.62 | — | — | |
| United Airlines Holdings Inc. | 0.83 | 1.00 | 1.19 | — | — | |
| United Parcel Service Inc. | 1.10 | 1.22 | 1.42 | — | — | |
| Current Ratio, Sector | ||||||
| Transportation | 1.06 | 1.14 | 1.24 | — | — | |
| Current Ratio, Industry | ||||||
| Industrials | 1.16 | 1.20 | 1.29 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= 13,572 ÷ 22,062 = 0.62
2 Click competitor name to see calculations.
The liquidity position exhibits a pattern of initial improvement followed by a subsequent decline, with the entity maintaining a current ratio below 1.0 throughout the five-year period analyzed.
- Current Assets Trend
- A significant increase in current assets occurred between 2019 and 2021, rising from US$ 8,206 million to a peak of US$ 17,336 million. This growth was followed by a consecutive two-year decline, with assets falling to US$ 13,572 million by December 31, 2023.
- Current Liabilities Trend
- Current liabilities showed an overall upward trajectory after 2020. While they decreased slightly from US$ 18,311 million in 2019 to US$ 16,569 million in 2020, they grew steadily thereafter, reaching US$ 22,062 million by the end of 2023.
- Current Ratio Interpretation
- The current ratio demonstrated a positive trend from 2019 to 2021, ascending from 0.45 to 0.91. However, this improvement was not sustained, as the ratio decreased to 0.71 in 2022 and further to 0.62 in 2023. The persistent state of the ratio remaining below 1.0 indicates that current liabilities consistently exceeded current assets, signaling a reliance on continuous cash flow or external financing to meet short-term obligations.
AI Ask an analyst for more
Quick Ratio
American Airlines Group Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash | 578) | 440) | 273) | 245) | 280) | |
| Short-term investments | 7,000) | 8,525) | 12,158) | 6,619) | 3,546) | |
| Restricted cash and short-term investments | 910) | 995) | 990) | 609) | 158) | |
| Accounts receivable, net | 2,026) | 2,138) | 1,505) | 1,342) | 1,750) | |
| Total quick assets | 10,514) | 12,098) | 14,926) | 8,815) | 5,734) | |
| Current liabilities | 22,062) | 21,496) | 19,006) | 16,569) | 18,311) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.48 | 0.56 | 0.79 | 0.53 | 0.31 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| FedEx Corp. | 1.25 | 1.31 | 1.40 | — | — | |
| Uber Technologies Inc. | 1.02 | 0.88 | 0.82 | — | — | |
| Union Pacific Corp. | 0.62 | 0.53 | 0.47 | — | — | |
| United Airlines Holdings Inc. | 0.73 | 0.91 | 1.10 | — | — | |
| United Parcel Service Inc. | 0.82 | 1.00 | 1.30 | — | — | |
| Quick Ratio, Sector | ||||||
| Transportation | 0.89 | 0.99 | 1.12 | — | — | |
| Quick Ratio, Industry | ||||||
| Industrials | 0.65 | 0.71 | 0.80 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 10,514 ÷ 22,062 = 0.48
2 Click competitor name to see calculations.
An evaluation of the liquidity position between 2019 and 2023 reveals a period of significant volatility, characterized by a temporary improvement in the short-term solvency profile followed by a subsequent decline.
- Total Quick Assets Trend
- A substantial increase in quick assets was observed from 2019 to 2021, with values rising from US$ 5,734 million to a peak of US$ 14,926 million. This growth was followed by a two-year contraction, as assets decreased to US$ 12,098 million in 2022 and further to US$ 10,514 million by the end of 2023.
- Current Liabilities Trajectory
- Current liabilities exhibited a generally upward trend after a brief decrease in 2020. Obligations rose from US$ 16,569 million in 2020 to US$ 22,062 million in 2023. This steady increase in short-term obligations has exerted downward pressure on the overall liquidity position.
- Quick Ratio Analysis
- The quick ratio improved from 0.31 in 2019 to a high of 0.79 in 2021, indicating a temporary strengthening of the capacity to meet immediate obligations. However, the ratio retreated to 0.56 in 2022 and 0.48 in 2023. The fact that the ratio remained consistently below 1.0 throughout the analyzed period indicates that quick assets were insufficient to fully cover current liabilities at any point between 2019 and 2023.
AI Ask an analyst for more
Cash Ratio
American Airlines Group Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash | 578) | 440) | 273) | 245) | 280) | |
| Short-term investments | 7,000) | 8,525) | 12,158) | 6,619) | 3,546) | |
| Restricted cash and short-term investments | 910) | 995) | 990) | 609) | 158) | |
| Total cash assets | 8,488) | 9,960) | 13,421) | 7,473) | 3,984) | |
| Current liabilities | 22,062) | 21,496) | 19,006) | 16,569) | 18,311) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.38 | 0.46 | 0.71 | 0.45 | 0.22 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| FedEx Corp. | 0.50 | 0.48 | 0.52 | — | — | |
| Uber Technologies Inc. | 0.66 | 0.56 | 0.55 | — | — | |
| Union Pacific Corp. | 0.21 | 0.18 | 0.18 | — | — | |
| United Airlines Holdings Inc. | 0.65 | 0.82 | 1.01 | — | — | |
| United Parcel Service Inc. | 0.18 | 0.31 | 0.58 | — | — | |
| Cash Ratio, Sector | ||||||
| Transportation | 0.47 | 0.52 | 0.65 | — | — | |
| Cash Ratio, Industry | ||||||
| Industrials | 0.28 | 0.32 | 0.39 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 8,488 ÷ 22,062 = 0.38
2 Click competitor name to see calculations.
The cash ratio exhibits significant volatility over the five-year period from 2019 to 2023, characterized by a sharp increase peaking in 2021 followed by a steady decline. This trajectory reflects a period of aggressive liquidity accumulation followed by a subsequent reduction in cash reserves alongside growing short-term obligations.
- Cash Asset Dynamics
- Total cash assets experienced substantial growth between 2019 and 2021, rising from US$ 3,984 million to a peak of US$ 13,421 million. Following this peak, a downward trend is observed, with assets declining to US$ 9,960 million in 2022 and further to US$ 8,488 million by December 31, 2023.
- Current Liability Trends
- Current liabilities remained relatively stable between 2019 and 2020 before entering a period of consistent growth. From 2020 to 2023, these obligations increased from US$ 16,569 million to US$ 22,062 million, indicating an expanding base of short-term debts and accruals.
- Cash Ratio Analysis
- The cash ratio improved from 0.22 in 2019 to a high of 0.71 in 2021, suggesting a strengthened capacity to meet immediate liabilities with cash on hand. However, this position weakened in the subsequent two years, with the ratio falling to 0.46 in 2022 and 0.38 in 2023. This decline is the result of the simultaneous reduction in cash assets and the increase in current liabilities.
AI Ask an analyst for more