Choice Hotels International Inc (CHH)

Quick ratio

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

December 31, 2024 calculation

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

The quick ratio of Choice Hotels International Inc has shown fluctuations over the past five years. As of December 31, 2020, the quick ratio stood at a healthy 1.03, indicating that the company had more than enough liquid assets to cover its current liabilities. However, by December 31, 2021, the quick ratio had declined to 0.90, suggesting a slight decrease in the company's ability to meet its short-term obligations with its most liquid assets.

The quick ratio took a significant drop to 0.10 by December 31, 2022, signaling a concerning liquidity position for Choice Hotels International Inc. This low quick ratio may raise red flags about the company's short-term financial health and its ability to cover immediate liabilities.

Subsequently, there was a slight improvement in the quick ratio to 0.15 by December 31, 2023, but it remained significantly below the ideal threshold of 1. This indicates that the company may still be struggling to meet its short-term obligations with its available liquid assets.

By December 31, 2024, the quick ratio further declined to 0.09, highlighting continued liquidity challenges for Choice Hotels International Inc. This deteriorating trend over the years may necessitate a closer examination of the company's working capital management and financial strategies to ensure adequate liquidity in the future.