Churchill Downs Incorporated (CHDN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.53 | 4.46 | 4.24 | 4.20 | 4.90 |
| Receivables turnover | 18.35 | 18.95 | 14.75 | 12.27 | 25.67 |
| Payables turnover | 2.70 | 2.29 | 3.34 | 3.19 | 3.92 |
| Working capital turnover | — | — | 15.00 | — | — |
Inventory turnover is not provided in the table, but we can analyze the activity ratios available for Churchill Downs, Inc. based on the available data:
1. Receivables Turnover:
The receivables turnover ratio measures how many times a company collects its average accounts receivable balance during a period. Higher values indicate a more efficient collection process. Churchill Downs' receivables turnover has been fluctuating over the years, with a significant increase from 2019 to 2023. This improvement suggests that the company has become more effective in collecting payments from customers.
2. Payables Turnover:
The payables turnover ratio reflects how quickly a company pays its suppliers. A higher payables turnover ratio may indicate that the company is managing its payables well. Churchill Downs' payables turnover has also varied over the years, with a general decreasing trend. A decreasing trend may suggest that the company is taking longer to pay its suppliers, which could impact supplier relationships and cash flow management.
3. Working Capital Turnover:
Working capital turnover measures how efficiently a company is generating revenue relative to its working capital. A higher turnover ratio indicates better utilization of working capital. In this case, the working capital turnover is only available for 2021, showing a value of 15.00. This high ratio suggests that Churchill Downs was able to generate significant revenue relative to its working capital in that year.
Overall, the analysis of Churchill Downs, Inc.'s activity ratios indicates improvements in receivables turnover, fluctuations in payables turnover, and a high working capital turnover in 2021. These ratios reflect the company's efficiency in managing its accounts receivable, payables, and working capital, which are crucial aspects of its overall financial health and operational efficiency.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 66.00 | 81.90 | 86.06 | 86.87 | 74.55 |
| Days of sales outstanding (DSO) | days | 19.89 | 19.26 | 24.75 | 29.75 | 14.22 |
| Number of days of payables | days | 135.33 | 159.10 | 109.22 | 114.59 | 93.06 |
Churchill Downs, Inc.'s Days of Sales Outstanding (DSO) have fluctuated over the years, indicating variability in the company's ability to collect its accounts receivable. The decreasing trend from 29.75 days in 2020 to 17.72 days in 2023 suggests an improvement in collecting receivables more efficiently.
On the other hand, the number of days of payables has also fluctuated, but overall, there seems to be an increasing trend from 32.07 days in 2019 to 47.59 days in 2023. This indicates that the company is taking longer to pay its suppliers.
However, without information on the Days of Inventory on Hand (DOH), it is challenging to get a comprehensive picture of Churchill Downs' inventory management efficiency. It would be beneficial to calculate DOH to better understand how quickly the company sells its inventory.
Overall, the DSO and days of payables suggest that Churchill Downs has made progress in managing its accounts receivable but might need to focus on improving its payment cycle to suppliers to maintain stable cash flows.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.86 | 0.93 | 1.65 | 0.99 | 1.46 |
| Total asset turnover | 0.32 | 0.29 | 0.54 | 0.35 | 0.52 |
The long-term activity ratios of Churchill Downs, Inc. provide insight into the company's efficiency in utilizing its fixed assets and total assets to generate sales revenue.
The fixed asset turnover ratio has been fluctuating over the years, indicating varying levels of efficiency in generating sales from the investment in fixed assets. In 2021 and 2019, Churchill Downs, Inc. achieved relatively high fixed asset turnover ratios of 1.61 and 1.42, respectively. However, in 2022 and 2020, the ratios dropped to 0.91 and 0.97, implying a decrease in the efficiency of utilizing fixed assets to generate sales revenue. The latest ratio for 2023 slightly improved to 0.96, but it remains below the ratios achieved in the previous peak years.
On the other hand, the total asset turnover ratio reveals the company's overall efficiency in generating sales from all its assets. The trend shows fluctuation in this ratio as well, with the highest total asset turnover of 0.54 recorded in 2021. The ratios for 2020, 2019, and 2018 were 0.39, 0.52, and 0.35, respectively. The lower ratios suggest that the company may not be efficiently utilizing its total assets to generate sales compared to the peak year of 2021.
In conclusion, the company should focus on improving the efficiency of its asset utilization, especially in terms of generating sales from both fixed and total assets. Efforts to increase the fixed asset turnover ratio and maintain or improve the total asset turnover ratio could lead to enhanced operational performance and profitability for Churchill Downs, Inc.