Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2013
- Operating Profit Margin since 2013
- Return on Equity (ROE) since 2013
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Liquidity Ratios (Summary)
American Airlines Group Inc., liquidity ratios (quarterly data)
Based on: 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Liquidity Ratios Overview
- The liquidity ratios exhibit significant changes over the analyzed periods, demonstrating an initial improvement followed by a gradual decline. The current ratio, quick ratio, and cash ratio all show parallel trends, reflecting the company's shifting short-term financial health.
- Current Ratio Analysis
- The current ratio started at a low point of 0.37 in March 2020, indicating a weak liquidity position. It increased markedly to above 1.0 by mid-2021, peaking at 1.05 in June 2021, signifying an improved ability to cover short-term liabilities with current assets. However, after this peak, the current ratio consistently declined, reaching 0.62 by December 2023. This downward trend suggests a gradual reduction in short-term liquidity over the later quarters.
- Quick Ratio Analysis
- The quick ratio mirrored the current ratio's trajectory, beginning at 0.25 in March 2020 and rising to a peak of 0.94 in June 2021. This indicates a substantial enhancement in the company’s capacity to meet short-term obligations without relying on inventory. Similar to the current ratio, the quick ratio subsequently decreased, falling to 0.48 by December 2023, which points to a weakening in liquid asset availability relative to current liabilities in the most recent periods.
- Cash Ratio Analysis
- The cash ratio showed a notable increase from 0.19 in March 2020 to a high of 0.88 in June 2021, reflecting a strengthened cash and cash-equivalents position relative to current liabilities. This increase suggests pronounced improvements in the most liquid assets available. Following the peak, the cash ratio declined steadily to 0.38 by December 2023, indicating a decrease in immediately available liquidity.
- Overall Liquidity Trend
- Across the analyzed timeframe, liquidity ratios rose sharply during 2020 and the first half of 2021, likely reflecting efforts to bolster financial resilience. However, from mid-2021 onward, a consistent decline is observed in all three ratios. While still above the very low levels seen at the beginning of 2020, the trend points to a gradual contraction in short-term liquidity, which could warrant closer monitoring to ensure adequate coverage of current liabilities.
- Concluding Insight
- The initial liquidity strengthening was significant and provided a buffer during challenging periods, but recent downward trends suggest a potential tightening of working capital conditions. The company’s liquidity management appears to be less robust in the latest quarters, which may impact its short-term financial flexibility.
Current Ratio
American Airlines Group Inc., current ratio calculation (quarterly data)
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Current assets | |||||||||||||||||||||
| Current liabilities | |||||||||||||||||||||
| Liquidity Ratio | |||||||||||||||||||||
| Current ratio1 | |||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||
| Current Ratio, Competitors2 | |||||||||||||||||||||
| FedEx Corp. | |||||||||||||||||||||
| Uber Technologies Inc. | |||||||||||||||||||||
| Union Pacific Corp. | |||||||||||||||||||||
| United Airlines Holdings Inc. | |||||||||||||||||||||
| United Parcel Service Inc. | |||||||||||||||||||||
Based on: 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q4 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets experienced significant fluctuations over the analyzed quarters. Starting at 7,175 million USD in the first quarter of 2020, current assets rose sharply to 13,789 million USD by mid-2020. After a slight decline toward the end of 2020, they increased again reaching a peak of 22,647 million USD in the second quarter of 2021. From this peak, a downward trend ensued with current assets decreasing to 13,572 million USD by the last quarter of 2023. The overall pattern reflects an initial recovery and buildup of current assets during the pandemic period, followed by a gradual reduction toward the end of the analyzed timeframe.
- Current Liabilities
- Current liabilities showed a more volatile and generally increasing pattern. Starting from 19,213 million USD in the first quarter of 2020, liabilities declined slightly to around 16,500 million USD by the third quarter of 2020. However, they increased markedly afterward, peaking at 24,590 million USD in the first quarter of 2023. A slight decrease followed in the last quarter of 2023 to 22,062 million USD. The trend suggests rising short-term financial obligations over the period, with liabilities exceeding current assets in most quarters.
- Current Ratio
- The current ratio, which measures liquidity by comparing current assets to current liabilities, began very low at 0.37 in the first quarter of 2020. This ratio improved substantially to above 1.0 during the first two quarters of 2021, indicating a brief period where current assets exceeded current liabilities. However, since mid-2021, the ratio consistently declined, staying below 1.0 and reaching as low as 0.62 by the end of 2023. This declining liquidity ratio signals increasing pressure on short-term financial stability and potential challenges in meeting short-term obligations as the period progresses.
- Summary of Trends
- The data reflects an initial phase of liquidity improvement and asset buildup during 2020 and early 2021, potentially related to operational adjustments or financing activities. However, from mid-2021 onward, the company faced increasing current liabilities relative to current assets, resulting in declining liquidity ratios below the industry standard threshold of 1.0. The persistent low current ratio suggests potential stresses on working capital and calls for attention to short-term financial management strategies.
Quick Ratio
American Airlines Group Inc., quick ratio calculation (quarterly data)
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Cash | |||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||
| Restricted cash and short-term investments | |||||||||||||||||||||
| Accounts receivable, net | |||||||||||||||||||||
| Total quick assets | |||||||||||||||||||||
| Current liabilities | |||||||||||||||||||||
| Liquidity Ratio | |||||||||||||||||||||
| Quick ratio1 | |||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||
| Quick Ratio, Competitors2 | |||||||||||||||||||||
| FedEx Corp. | |||||||||||||||||||||
| Uber Technologies Inc. | |||||||||||||||||||||
| Union Pacific Corp. | |||||||||||||||||||||
| United Airlines Holdings Inc. | |||||||||||||||||||||
| United Parcel Service Inc. | |||||||||||||||||||||
Based on: 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q4 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Liquidity Trends
- The total quick assets exhibited significant fluctuations over the observed periods. Beginning at approximately $4.75 billion at the end of Q1 2020, quick assets sharply increased to a peak above $20 billion in mid-2021, followed by a gradual decline towards the end of 2023, finishing at around $10.5 billion. This pattern indicates an initial accumulation of liquid resources during 2020 and early 2021, potentially as a buffer during uncertain market conditions, before a reduction in quick assets in subsequent quarters.
- Current Liabilities Evolution
- Current liabilities showed a general upward trend from $19.2 billion in Q1 2020 to a peak near $24.6 billion in early 2023. Although there was some volatility, liabilities consistently remained elevated, with minor decreases toward the end of 2023, closing at approximately $22.1 billion. The increasing liability levels suggest growing short-term obligations over time, which may impact liquidity considerations.
- Quick Ratio Analysis
- The quick ratio, which measures the ability to meet short-term obligations without relying on inventory sales, started at a low 0.25 in early 2020, then increased substantially during the pandemic period, reaching close to 0.94 in mid-2021. This represents improved liquidity and financial flexibility during that time. However, after this peak, the quick ratio experienced a steady decline through to the end of 2023, falling below 0.5 in the last quarter. This decreasing trend may raise concerns about the company's short-term financial health and its capability to cover immediate liabilities with liquid assets.
- Overall Interpretation
- The financial data indicates a period of liquidity strengthening in 2020 and early 2021, likely reflecting strategic efforts to enhance short-term financial stability. However, since mid-2021, there has been a gradual erosion of this liquidity cushion, with quick assets diminishing and current liabilities remaining elevated, resulting in a declining quick ratio. This trend suggests increasing pressure on the company’s short-term solvency, warranting attention to liquidity management and perhaps indicating reliance on other forms of financing or operational changes to navigate ongoing financial demands.
Cash Ratio
American Airlines Group Inc., cash ratio calculation (quarterly data)
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Cash | |||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||
| Restricted cash and short-term investments | |||||||||||||||||||||
| Total cash assets | |||||||||||||||||||||
| Current liabilities | |||||||||||||||||||||
| Liquidity Ratio | |||||||||||||||||||||
| Cash ratio1 | |||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||
| Cash Ratio, Competitors2 | |||||||||||||||||||||
| FedEx Corp. | |||||||||||||||||||||
| Uber Technologies Inc. | |||||||||||||||||||||
| Union Pacific Corp. | |||||||||||||||||||||
| United Airlines Holdings Inc. | |||||||||||||||||||||
| United Parcel Service Inc. | |||||||||||||||||||||
Based on: 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q4 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Cash Assets
-
Total cash assets experienced significant fluctuations over the observed quarters. Beginning at a low point of approximately $3.7 billion in the first quarter of 2020, cash holdings increased sharply to reach a peak of about $18.9 billion in the second quarter of 2021. Following this peak, a downward trend is apparent, with total cash assets gradually declining to roughly $8.5 billion by the last quarter of 2023. This indicates an initial accumulation of liquidity, possibly for strategic or precautionary reasons, followed by a gradual reduction in cash reserves over the subsequent quarters.
- Current Liabilities
-
Current liabilities showed notable variability throughout the period. Beginning at approximately $19.2 billion in the first quarter of 2020, there was a slight decrease during the middle quarters of 2020, reaching a low near $16.6 billion by the third quarter of 2020. Subsequently, liabilities rose, peaking at about $24.6 billion in the first quarter of 2023. The latter quarters indicate a minor decline, ending near $22.1 billion by the last quarter of 2023. The overall pattern suggests an increasing burden of short-term obligations over the period, which may have implications for liquidity and operational financing.
- Cash Ratio
-
The cash ratio, representing the company's liquidity by comparing cash assets to current liabilities, exhibited a fluctuating trend. Starting at a low level of 0.19 in the first quarter of 2020, the ratio rose substantially to a high of 0.88 in the second quarter of 2021, coinciding with peak cash assets. After this peak, the ratio has trended downward, reaching approximately 0.38 by the fourth quarter of 2023. This decline in cash ratio reflects a reduction in available cash relative to short-term liabilities, indicating potentially tighter liquidity conditions in the most recent periods.
- Overall Analysis
-
The combined data depict a scenario in which cash reserves were significantly bolstered during 2020 and early 2021, improving liquidity and increasing the cash ratio to its highest point in the period observed. Concurrently, current liabilities initially decreased but then steadily increased, particularly from late 2020 onward, leading to growing short-term financial obligations. The balance between cash assets and liabilities, as shown by the declining cash ratio after mid-2021, suggests a gradual tightening of liquidity. This may warrant careful management of working capital to ensure continued financial stability and operational capacity.