Choice Hotels International Inc (CHH)
Liquidity ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.31 | 0.84 | 0.86 | 0.92 | 0.80 | 1.08 | 1.69 | 1.40 | 1.34 | 1.20 | 1.92 | 1.83 | 1.69 | 1.65 | 2.40 | 2.08 | 0.73 | 0.82 | 0.86 | 0.82 |
| Quick ratio | 0.27 | 0.63 | 0.66 | 0.73 | 0.72 | 0.95 | 1.49 | 1.35 | 1.28 | 1.23 | 1.97 | 1.73 | 1.50 | 1.68 | 2.30 | 1.98 | 0.54 | 0.64 | 0.67 | 0.61 |
| Cash ratio | 0.03 | -0.04 | -0.02 | -0.00 | 0.10 | 0.12 | 1.04 | 0.94 | 0.90 | 0.78 | 1.11 | 0.91 | 1.03 | 0.87 | 1.44 | 1.26 | 0.10 | 0.10 | 0.11 | 0.10 |
Choice Hotels International Inc's liquidity ratios show significant fluctuations over the past few quarters. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been inconsistent, ranging from a low of 0.31 to a high of 2.40. A current ratio below 1 indicates potential liquidity concerns, and the company experienced this in several quarters.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown variability, ranging from 0.27 to 2.30. This ratio provides a more conservative view of the company's ability to meet its short-term obligations without relying on inventory sales.
The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents in relation to current liabilities, has also fluctuated significantly. The cash ratio ranged from -0.04 to 1.44, with negative values indicating that current liabilities exceeded cash and cash equivalents on hand in some quarters.
Overall, the liquidity ratios of Choice Hotels International Inc suggest that the company has faced challenges in maintaining sufficient liquidity to cover its short-term obligations consistently. Management should closely monitor these ratios and work towards improving the company's liquidity position to ensure financial stability and ability to meet obligations as they come due.
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
The cash conversion cycle measures how efficiently a company manages its working capital by evaluating the time it takes to convert its investments in inventory and accounts receivable into cash flow from sales. A negative cash conversion cycle indicates that the company is able to collect cash from customers more quickly than it pays its suppliers and converts inventory into sales.
Choice Hotels International Inc has consistently maintained a negative cash conversion cycle throughout the periods analyzed. The cycle has shown fluctuations but generally has been efficiently managed, reflecting the company's ability to collect cash from hotel bookings and franchise fees faster than paying its operating expenses and suppliers.
The latest available data as of December 31, 2023, shows a cash conversion cycle of -55.94 days, indicating that the company is efficient in managing its working capital during this period. The overall trend suggests that Choice Hotels International Inc has been effective in managing its cash flows and working capital over the past years.
It is essential for investors and stakeholders to monitor the cash conversion cycle as it provides insights into the company's liquidity, operational efficiency, and financial health. Overall, a consistently negative cash conversion cycle for Choice Hotels International Inc reflects a well-managed working capital position and efficient cash flow management.