Chipotle Mexican Grill Inc (CMG)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.52 | 1.62 | 1.71 | 1.65 | 1.57 | 1.53 | 1.58 | 1.41 | 1.28 | 1.32 | 1.26 | 1.32 | 1.58 | 1.78 | 1.73 | 1.75 | 1.73 | 1.51 | 1.59 | 1.62 |
| Quick ratio | 1.98 | 2.13 | 2.25 | 2.21 | 2.13 | 2.19 | 2.31 | 1.99 | 1.70 | 1.18 | 1.13 | 1.19 | 1.45 | 1.67 | 1.62 | 1.64 | 1.63 | 1.42 | 1.48 | 1.50 |
| Cash ratio | 1.79 | 1.96 | 2.08 | 2.12 | 1.97 | 2.12 | 2.25 | 1.92 | 1.53 | 0.96 | 0.92 | 1.03 | 1.23 | 1.20 | 1.19 | 1.27 | 1.16 | 1.25 | 1.25 | 1.32 |
Chipotle Mexican Grill Inc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term financial obligations.
Starting with the current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, we observe some fluctuations over the years. The current ratio ranged from a high of 1.78 on September 30, 2021, to a low of 1.26 on June 30, 2022. This indicates that the company generally had more current assets than current liabilities, with a ratio above 1 indicating a healthy liquidity position. However, the ratio showed some variability, possibly due to shifts in the company's asset and liability structure.
Moving on to the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, we see that Chipotle's quick ratio generally remained healthy throughout the period. The quick ratio ranged from a low of 1.13 on June 30, 2022, to a high of 2.31 on June 30, 2023. The increasing trend in the quick ratio suggests that the company has a strong ability to meet short-term obligations with liquid assets, such as cash and equivalents.
Lastly, the cash ratio, which focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents, exhibited a similar trend to the quick ratio. The cash ratio ranged from a low of 0.92 on June 30, 2022, to a high of 2.25 on June 30, 2023. This indicates that Chipotle had a comfortable level of cash on hand to cover its short-term liabilities, reflecting strong liquidity.
In conclusion, Chipotle Mexican Grill Inc maintained generally healthy liquidity ratios over the period, with the company demonstrating the ability to meet its short-term obligations using its current assets, liquid assets, and cash reserves. The increasing trend in the quick ratio and cash ratio reflects a strengthening liquidity position, which is essential for financial stability and operational efficiency.
See also:
Chipotle Mexican Grill Inc Liquidity Ratios (Quarterly Data)
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -1.39 | -3.19 | -3.26 | -5.68 | -2.93 | -7.33 | -5.36 | -6.68 | -3.06 | -0.79 | -0.49 | -3.07 | 0.01 | 9.06 | 10.06 | 7.75 | 15.32 | -7.94 | -6.45 | -5.66 |
Chipotle Mexican Grill Inc's cash conversion cycle, a key metric for measuring the efficiency of its working capital management, has exhibited variations over the periods stated. The negative values observed in the cycle for most of the quarters suggest that the company's operating cycle is relatively efficient, allowing it to convert its resources into cash quickly.
During December 31, 2020, the cash conversion cycle increased significantly to 15.32 days, indicating a potential delay in converting its investments in inventory and receivables into cash during that period. However, Chipotle managed to reduce this cycle in subsequent periods, with a notable improvement seen in December 31, 2021, where the cycle reduced to a mere 0.01 days, indicating a swift conversion of resources into cash during that quarter.
The positive trend continued into the following quarters, with the cash conversion cycle staying low or negative, signifying efficient working capital management and quick cash conversion. These results suggest that Chipotle Mexican Grill Inc has been successful in streamlining its operations to maximize cash flows and enhance liquidity, which can be vital for sustaining and growing the business in the long run.