Churchill Downs Incorporated (CHDN)

Based on the provided data on Churchill Downs, Inc.'s liquidity ratios, we can observe the following trends:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term obligations with its current assets.
- In Q4 2023, the current ratio was 0.53, indicating that Churchill Downs, Inc. had only $0.53 in current assets for every $1 in current liabilities.
- The current ratio fluctuated over the quarters, ranging from as low as 0.53 to as high as 3.79 in Q3 2022.
- The current ratio below 1 in most quarters suggests potential issues with meeting short-term obligations using current assets alone.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets.
- Churchill Downs, Inc.'s quick ratio ranged from 0.43 to 1.05 across the quarters.
- Similar to the current ratio, the quick ratio fell below 1 in most quarters, indicating potential difficulties in meeting immediate liabilities without relying on inventory.

3. Cash Ratio:
- The cash ratio specifically measures the company's ability to cover its short-term liabilities with cash and cash equivalents.
- Churchill Downs, Inc.'s cash ratio ranged from 0.27 to 0.81, with the highest value observed in Q1 2022.
- The cash ratio reflects the company's liquidity position in terms of its ability to pay off short-term obligations using cash resources alone.

Overall, based on the trend in the liquidity ratios, Churchill Downs, Inc. shows fluctuations in liquidity levels over the quarters, with the ratios being generally below 1 in most cases. This indicates potential challenges in the company's ability to meet short-term obligations without relying on inventory or other current assets. Further analysis and monitoring of liquidity management may be necessary to ensure financial stability and solvency.

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Additional liquidity measure

Churchill Downs, Inc. has shown fluctuations in its cash conversion cycle over the past several quarters. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other inputs into cash flows from sales.

The company's cash conversion cycle has generally been negative, indicating efficient management of working capital and quick conversion of inventory and accounts receivable into cash. However, it is important to note the variation in the cycle over the quarters.

In Q1 2022, the company had a relatively short cash conversion cycle of -23.61 days, indicating a quick conversion of inventory and receivables into cash. This was followed by an increase in the cycle to -49.26 days in Q2 2022, suggesting a lengthening of the time taken to convert investments into cash.

Subsequently, the cash conversion cycle improved in Q3 2022 and Q4 2022, with figures of -35.39 days and -40.42 days, respectively. This trend continued into 2023 with further improvements in Q1 and Q2, achieving -39.13 days and -40.06 days, respectively.

However, in Q3 2023, there was a slight increase in the cash conversion cycle to -33.61 days, followed by a further increase to -29.87 days in Q4 2023. These increases may indicate potential issues with inventory management, accounts receivable collection, or overall working capital efficiency.

Overall, Churchill Downs, Inc. has demonstrated effective management of its cash conversion cycle, with most quarters showing negative cycles, reflecting the company's ability to efficiently convert its investments into cash. Continued monitoring and analysis of working capital management practices will be crucial for sustaining this efficiency in the future.