Choice Hotels International Inc (CHH)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	40,177	26,754	41,566	511,605	234,779
Short-term investments	US$ in thousands	—	110,330	—	—	29,104
Total current liabilities	US$ in thousands	462,721	942,690	435,898	570,295	255,847
Cash ratio		0.09	0.15	0.10	0.90	1.03

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($40,177K + $—K) ÷ $462,721K
= 0.09

The cash ratio of Choice Hotels International Inc has experienced fluctuations over the past five years. Analyzing the trend, we observe a gradual decrease from 1.03 on December 31, 2020, to 0.90 on December 31, 2021. This suggests the company may have slightly reduced its ability to cover its short-term liabilities solely with cash and cash equivalents during this period.

However, a more significant drop is seen from 0.90 on December 31, 2021, to 0.10 on December 31, 2022. This sharp decline indicates a concerning decrease in the company's liquidity position, potentially pointing towards issues in managing short-term obligations.

There is a modest improvement in the cash ratio from 0.10 on December 31, 2022, to 0.15 on December 31, 2023, suggesting some efforts to enhance the liquidity position. Nevertheless, the ratio remains relatively low compared to the starting point in 2020.

Further, by the end of December 31, 2024, the cash ratio drops again to 0.09. This indicates a continued challenge in the company's ability to quickly cover its short-term debts solely with cash and cash equivalents, signifying potentially strained liquidity levels.

In summary, the decreasing trend in Choice Hotels International Inc's cash ratio raises concerns about its liquidity position and ability to meet short-term obligations with available cash resources over the specified period from 2020 to 2024.