Choice Hotels International Inc (CHH)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 9.20 | — | — | — | — |
| Receivables turnover | 6.69 | 5.12 | 4.86 | 6.52 | 7.87 |
| Payables turnover | 2.43 | 2.03 | 2.35 | 2.42 | 2.70 |
| Working capital turnover | — | — | 5.59 | 4.37 | — |
Choice Hotels International Inc's activity ratios provide insights into how efficiently the company is managing its assets and liabilities.
1. Inventory Turnover: The inventory turnover ratio for 2023 is 9.20, indicating that Choice Hotels is selling and replenishing its inventory efficiently.
2. Receivables Turnover: The receivables turnover ratio has been relatively stable over the years, with a slight increase from 2022 to 2023. This suggests that the company is collecting its accounts receivables efficiently.
3. Payables Turnover: The payables turnover ratio increased from 2.03 in 2022 to 2.43 in 2023, indicating that Choice Hotels is paying its suppliers at a slightly faster rate.
4. Working Capital Turnover: The working capital turnover ratio provides insights into how effectively the company is using its working capital to generate revenue. Unfortunately, data is missing for 2023 and 2022. However, the ratio increased from 2019 to 2021, suggesting an improvement in the company's efficiency in utilizing its working capital.
Overall, Choice Hotels International Inc's activity ratios reflect a reasonable level of efficiency in managing its inventory, receivables, and payables, with some improvements in working capital turnover over the years.
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 | 39.69 | — | — | — | — |
| Days of sales outstanding (DSO) | days | 54.59 | 71.29 | 75.13 | 55.99 | 46.35 |
| Number of days of payables | days | 150.28 | 179.55 | 155.02 | 150.71 | 135.00 |
To analyze Choice Hotels International Inc's activity ratios based on the provided data:
1. Days of Inventory on Hand (DOH):
- The DOH for 2023 is 39.69 days. This indicates that on average, Choice Hotels holds inventory for approximately 39.69 days before it is sold.
- Data for DOH for the years prior to 2023 is not available in the table, making it difficult to assess the trend in inventory management efficiency over time.
2. Days of Sales Outstanding (DSO):
- The DSO for 2023 is 54.59 days. This suggests that on average, Choice Hotels takes approximately 54.59 days to collect payments from customers after a sale is made.
- There was a decrease in DSO from 2022 to 2023, indicating an improvement in the company's ability to collect receivables more efficiently.
3. Number of Days of Payables:
- The number of days of payables for 2023 is 150.28 days. This implies that on average, Choice Hotels takes approximately 150.28 days to pay its trade payables.
- The trend in payables days shows fluctuations over the years, but overall, there seems to be a consistent payment pattern.
In conclusion, based on the activity ratios provided:
- Choice Hotels International Inc has shown improvement in collecting payments from customers more quickly in 2023 compared to the previous year.
- The company maintains a consistent payment pattern for trade payables.
- Without historical data for Days of Inventory on Hand, it is challenging to assess the efficiency of inventory management over time.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.13 | 3.28 | 2.83 | 2.31 | 3.17 |
| Total asset turnover | 0.64 | 0.67 | 0.55 | 0.49 | 0.80 |
Choice Hotels International Inc's long-term activity ratios indicate how efficiently the company is utilizing its assets to generate revenue over the years.
The fixed asset turnover ratio has been fluctuating but generally improving from 2.31 in 2020 to 3.13 in 2023. This suggests that the company is generating more revenue for each dollar invested in fixed assets, such as property, plant, and equipment. The improvement in this ratio demonstrates increased efficiency in utilizing long-term assets to generate sales.
On the other hand, the total asset turnover ratio has also shown an overall improvement, albeit with some fluctuations, from 0.49 in 2020 to 0.64 in 2023. This ratio indicates how efficiently the company is generating sales from all its assets, including both fixed and current assets. The increasing trend in total asset turnover suggests that Choice Hotels International Inc is efficiently using its total assets to generate revenue.
Overall, both fixed asset turnover and total asset turnover ratios have improved over the years, implying increased efficiency in utilizing long-term assets to generate sales and a more effective overall asset management strategy.