Choice Hotels International Inc (CHH)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 26,754 | 41,566 | 511,605 | 234,779 | 33,766 |
| Short-term investments | US$ in thousands | — | — | — | 29,104 | — |
| Total current liabilities | US$ in thousands | 942,690 | 435,898 | 570,295 | 255,847 | 325,888 |
| Cash ratio | 0.03 | 0.10 | 0.90 | 1.03 | 0.10 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($26,754K
+ $—K)
÷ $942,690K
= 0.03
The cash ratio of Choice Hotels International Inc has experienced a significant decline over the past five years. In 2021, the cash ratio was 0.90, indicating that the company had sufficient cash reserves to cover 90% of its current liabilities. However, this ratio dropped to 0.03 in 2023, signaling a substantial decrease in the company's ability to cover its short-term obligations with cash on hand.
This declining trend in the cash ratio raises concerns about Choice Hotels' liquidity position and ability to meet its short-term financial obligations. A lower cash ratio could imply that the company may face challenges in paying off its creditors or funding its day-to-day operations solely from its cash reserves. It also suggests a potential increased reliance on other sources of liquidity, such as borrowing or asset liquidation.
It is essential for investors and stakeholders to monitor Choice Hotels' cash position and liquidity management closely, as a further deterioration in the cash ratio may indicate financial distress or operational inefficiencies within the company.
Peer comparison
Dec 31, 2023