Churchill Downs Incorporated (CHDN)

The current ratio of Churchill Downs Incorporated has shown fluctuations over the past few years, ranging from a low of 0.50 on March 31, 2024, to a high of 3.79 on June 30, 2022. This ratio measures the company's ability to cover its short-term liabilities with its current assets. The most recent current ratio as of December 31, 2024, is 0.57, indicating a decline in the company's liquidity compared to the prior periods.

The quick ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity. Similarly to the current ratio, the quick ratio of Churchill Downs Incorporated has varied considerably, with the lowest point being 0.19 on both September 30, 2023, and December 31, 2023. The quick ratio as of December 31, 2024, stands at 0.24, reflecting the company's ability to meet its short-term obligations without relying on selling inventory.

Lastly, the cash ratio of Churchill Downs Incorporated, which only considers cash and cash equivalents in its calculation, has also experienced fluctuations. The December 31, 2024, cash ratio is 0.24, indicating that the company holds $0.24 in cash and cash equivalents for every dollar of current liabilities. This ratio provides insights into the company's immediate ability to settle its short-term obligations with its readily available cash resources.

In conclusion, while Churchill Downs Incorporated has shown varying levels of liquidity over the analyzed periods, it is essential for investors and stakeholders to closely monitor these ratios to assess the company's ability to meet its financial obligations in the short term.

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Additional liquidity measure

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory into cash flows from sales. For Churchill Downs Incorporated, the cash conversion cycle has experienced fluctuations over the data period provided.

From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a low of 14.31 days to a high of 491.20 days. The company's cash conversion cycle was relatively stable in the initial period, with days ranging between 15 and 23 days. However, a significant and abnormal spike occurred in the second quarter of 2022 and the third quarter of 2022, with the cycle exceeding 490 days. This sudden and extreme increase indicates a potential issue with managing inventory, receivables, or payables efficiently during that period.

Fortunately, the company was able to swiftly reduce the cash conversion cycle back to more typical levels in the subsequent periods, reaching as low as 0 days by March 31, 2024, and maintaining a very short cycle throughout the end of 2024. This indicates an improvement in the company's ability to manage its working capital efficiently, possibly by streamlining operations or implementing more effective inventory and cash flow management practices.

Overall, the analysis of Churchill Downs Incorporated's cash conversion cycle reveals both stable and volatile periods, emphasizing the importance of closely monitoring and managing working capital to ensure optimal cash flow and operational efficiency.