Choice Hotels International Inc (CHH)
Cash conversion cycle
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 39.66 | — | — | — | — | — | — | — | 46.08 | — | — | — | — | — | — | — | — | 36.44 | 37.19 | 40.07 |
| Days of sales outstanding (DSO) | days | 54.59 | 66.56 | 66.08 | 67.20 | 71.29 | 96.59 | 77.15 | 74.66 | 75.13 | 100.51 | 114.83 | 97.73 | 55.99 | 88.35 | 72.28 | 59.92 | 46.35 | 57.44 | 61.75 | 53.51 |
| Number of days of payables | days | 150.19 | 162.22 | 149.91 | 125.61 | 179.74 | 201.55 | 194.16 | 171.97 | 155.36 | 166.29 | 170.20 | 127.39 | 150.57 | 170.05 | 120.80 | 141.70 | 135.00 | 151.54 | 173.56 | 129.76 |
| Cash conversion cycle | days | -55.94 | -95.66 | -83.83 | -58.41 | -108.45 | -104.96 | -117.01 | -97.31 | -34.15 | -65.78 | -55.37 | -29.66 | -94.58 | -81.69 | -48.51 | -81.77 | -88.65 | -57.65 | -74.61 | -36.18 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 39.66 + 54.59 – 150.19
= -55.94
The cash conversion cycle measures how quickly a company can convert its investments in inventory and other resources into cash flow from sales. A shorter cash conversion cycle typically indicates more efficient working capital management.
Based on the data provided for Choice Hotels International Inc, the cash conversion cycle has fluctuated over the past few periods. In the most recent period ending December 31, 2023, the cash conversion cycle improved significantly to -55.94 days compared to the previous period, indicating a more efficient utilization of cash resources.
Looking at the trend over the past few years, there have been periods of both positive and negative cash conversion cycles. Negative days indicate that the company is able to generate cash from its operations before having to pay its suppliers, which can be a positive sign of liquidity and efficiency.
It is important to monitor and analyze the cash conversion cycle over time to ensure that the company is effectively managing its working capital, optimizing inventory levels, and efficiently collecting receivables. A consistently improving or low cash conversion cycle can indicate effective cash flow management and operational efficiency within the company.
Peer comparison
Dec 31, 2023