Choice Hotels International Inc (CHH)

Current ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total current assets	US$ in thousands	296,530	347,922	761,661	432,914	236,589
Total current liabilities	US$ in thousands	942,690	435,898	570,295	255,847	325,888
Current ratio		0.31	0.80	1.34	1.69	0.73

December 31, 2023 calculation

Current ratio = Total current assets ÷ Total current liabilities
= $296,530K ÷ $942,690K
= 0.31

The current ratio of Choice Hotels International Inc has shown a declining trend over the past five years. It decreased from 0.73 in 2019 to 0.31 in 2023. This indicates a significant decrease in the company's ability to cover its short-term obligations with its current assets. A current ratio below 1 implies that the company may have difficulty meeting its short-term liabilities with its current assets alone.

It's noteworthy that the current ratio was at its highest in 2021 at 1.34, suggesting a relatively stronger position to meet short-term obligations that year. However, the ratio dropped to 0.80 in 2022 and further to 0.31 in 2023, indicating a potential liquidity concern.

The declining trend in the current ratio may raise red flags for investors and creditors regarding Choice Hotels International Inc's short-term financial health and ability to manage its current liabilities effectively. The company might need to assess and potentially improve its liquidity management strategies to ensure it can meet its short-term obligations in a sustainable manner.