Choice Hotels International Inc (CHH)

Liquidity ratios

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current ratio 0.73 0.31 0.80 1.34 1.69
Quick ratio 0.09 0.15 0.10 0.90 1.03
Cash ratio 0.09 0.15 0.10 0.90 1.03

Choice Hotels International Inc's liquidity ratios have shown a declining trend over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 1.69 in 2020 to 0.73 in 2024. This indicates that the company may be facing challenges in meeting its short-term obligations as its current assets have decreased relative to its current liabilities.

Similarly, the quick ratio, which provides a more stringent assessment of liquidity by excluding inventory from current assets, also declined from 1.03 in 2020 to 0.09 in 2024. This suggests that Choice Hotels International Inc may have limited immediate resources to cover its short-term liabilities without relying on inventory.

The cash ratio, which specifically looks at the company's ability to pay off its current liabilities using only its cash and cash equivalents, remained relatively stable at 0.09 in 2024 compared to 0.10 in 2022 and 2023. This indicates that while the company's cash position hasn't deteriorated significantly, it remains at a relatively low level compared to its short-term obligations.

Overall, the decreasing trend in these liquidity ratios for Choice Hotels International Inc raises concerns about its short-term financial health and ability to cover its near-term liabilities. Management may need to focus on improving liquidity by increasing cash reserves or effectively managing current assets and liabilities.


Additional liquidity measure

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash conversion cycle days 0.00 14.82 0.00 0.00 0.00

Choice Hotels International Inc's cash conversion cycle has been fairly stable over the years, with the cycle being 0.00 days for the years 2020, 2021, and 2022. This indicates that the company is efficiently managing its cash flow and working capital during these years.

However, there was a significant increase in the cash conversion cycle to 14.82 days on December 31, 2023. This increase may suggest that the company took longer to convert its investments in inventory and receivables into cash during that particular year.

By December 31, 2024, the cash conversion cycle returned to 0.00 days, possibly indicating that the company took corrective actions to improve its cash conversion efficiency.

Overall, analyzing the fluctuations in the cash conversion cycle can provide insights into Choice Hotels International Inc's liquidity management and operational efficiency over the years.