Choice Hotels International Inc (CHH)

Short-term

Turnover ratios

Choice Hotels International Inc's activity ratios show varying levels of efficiency in managing its operations over time.

- Inventory turnover: Choice Hotels had an inventory turnover of 19.51 times at the end of December 31, 2021, which increased to 24.63 times by the end of December 31, 2023. This indicates that the company is selling and replenishing its inventory more frequently, which is generally a positive sign of efficient inventory management.

- Receivables turnover: The receivables turnover ratio was not provided in the data, indicating a lack of visibility into how quickly the company collects its accounts receivable. Without this information, it is challenging to assess the effectiveness of Choice Hotels in collecting credit sales from its customers.

- Payables turnover: Similar to receivables turnover, the payables turnover ratio was not available in the data, making it difficult to evaluate how quickly the company pays its suppliers. A higher payables turnover ratio would suggest a more favorable position in managing payments to vendors.

- Working capital turnover: Choice Hotels' working capital turnover ranged from 2.97 to 40.43 over the period provided. A higher working capital turnover ratio indicates that the company is generating more revenue relative to its working capital investment. The significant increase in working capital turnover to 40.43 by September 30, 2022, may suggest a more efficient utilization of working capital during that period, potentially due to improved operational efficiencies or revenue generation.

Overall, while the data portrays a positive trend in inventory turnover and working capital turnover, the lack of information on receivables and payables turnover limits a comprehensive analysis of Choice Hotels International Inc's overall activity efficiency.

---

Average number of days

Based on the provided data for Choice Hotels International Inc, the activity ratios can be analyzed as follows:

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, a company holds inventory before selling it.
- In December 2021, the DOH was 18.71 days, indicating that Choice Hotels held its inventory for approximately 18 days before selling it.
- In December 2023, the DOH decreased to 14.82 days, suggesting a more efficient management of inventory.

2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects the average number of days it takes for a company to collect payment after making a sale.
- The data provided shows that DSO values are not available for the relevant periods, indicating a lack of information to calculate this ratio.

3. Number of Days of Payables:
- The number of days of payables indicates the average time a company takes to pay its suppliers.
- Data for the number of days of payables is not available for the periods, suggesting a lack of information to calculate this ratio.

In conclusion, while the information provided allows us to assess the Days of Inventory on Hand, the data for Days of Sales Outstanding and Number of Days of Payables is missing. Proper evaluation and monitoring of these activity ratios are essential for understanding how efficiently Choice Hotels manages its inventory, accounts receivable, and accounts payable.

---

Long-term

Choice Hotels International Inc's fixed asset turnover ratio has fluctuated over the years, indicating varying efficiency in generating revenues from its fixed assets. The ratio decreased from 3.18 in March 2020 to 2.20 in March 2021, signaling a decrease in the company's ability to generate sales from its fixed assets. However, there was a notable improvement from June 2022 to March 2024, with the ratio reaching a peak of 3.54 in June 2022.

In terms of total asset turnover, the trend was similar to fixed asset turnover, with fluctuations observed over the years. The ratio declined from 0.65 in March 2020 to 0.47 in March 2021, before gradually increasing to 0.71 in June 2023. The company's ability to generate revenue from its total assets showed slight improvement towards the end of the period, reaching 0.63 in December 2024.

Overall, these ratios indicate that Choice Hotels International Inc experienced varying levels of efficiency in generating sales from both its fixed assets and total assets during the period under review.