Chipotle Mexican Grill Inc (CMG)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.52 | 1.57 | 1.28 | 1.58 | 1.73 |
| Quick ratio | 1.98 | 2.13 | 1.70 | 1.45 | 1.63 |
| Cash ratio | 1.79 | 1.97 | 1.53 | 1.23 | 1.16 |
The current ratio for Chipotle Mexican Grill Inc has shown a slight decline from 1.73 in December 2020 to 1.52 in December 2024. This indicates that the company's ability to meet its short-term obligations with its current assets has weakened over the years. Despite the decline, the current ratio remains above 1, suggesting that Chipotle still has more than enough current assets to cover its current liabilities.
In contrast, the quick ratio has fluctuated over the years, reaching a low of 1.45 in December 2021 and peaking at 2.13 in December 2023. This ratio, which excludes inventory from current assets, provides a more stringent measure of liquidity. The increase in the quick ratio in 2023 suggests that Chipotle had more liquid assets relative to its current liabilities during that period.
The cash ratio, which is the most conservative liquidity measure, has generally increased from 1.16 in December 2020 to 1.79 in December 2024. This indicates that Chipotle's ability to cover its short-term liabilities solely with cash and cash equivalents has improved over the years.
Overall, while there have been fluctuations in Chipotle's liquidity ratios, the company has maintained a strong liquidity position with current assets comfortably covering its short-term obligations. The increasing trend in the cash ratio also suggests an improved ability to settle immediate liabilities with cash resources.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -1.39 | -2.93 | -3.06 | 0.01 | 15.32 |
The cash conversion cycle of Chipotle Mexican Grill Inc has shown a notable improvement over the past few years. As of December 31, 2020, the company's cash conversion cycle was 15.32 days, indicating that it took Chipotle around 15 days to turn its investment in inventory into cash.
By December 31, 2021, Chipotle had significantly reduced its cash conversion cycle to just 0.01 days, suggesting that the company had become more efficient in managing its working capital. Furthermore, by December 31, 2022, Chipotle's cash conversion cycle had turned negative, standing at -3.06 days, indicating that the company was able to convert its cash into inventory and back into cash within a shorter period than before.
The trend continued to improve in the following years, with the cash conversion cycle further decreasing to -2.93 days by December 31, 2023 and to -1.39 days by December 31, 2024. These negative values signify that Chipotle Mexican Grill Inc was able to manage its working capital exceptionally well, optimizing its operations to efficiently convert inventory into cash.
Overall, the decreasing trend in Chipotle's cash conversion cycle demonstrates the company's effective management of its working capital and operational efficiency in converting its resources into cash, which is a positive indicator of its financial health and performance.