Cinemark Holdings Inc (CNK)

Short-term

Turnover ratios

Based on the provided data for Cinemark Holdings Inc, let's analyze the activity ratios:

1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently a company manages its inventory by showing how many times during a period the company sells and replaces its inventory.
- Cinemark's inventory turnover has been declining over the years, indicating that the company is taking longer to sell its inventory. This could be due to factors like changing consumer preferences, ineffective inventory management, or disruptions in the supply chain.

2. Receivables Turnover:
- The receivables turnover ratio indicates how efficiently a company collects its accounts receivable during a specific period.
- Cinemark's receivables turnover has shown inconsistency, with data missing for some years. A higher ratio signifies quicker collection of receivables, which indicates good credit policies and efficient collection processes.

3. Payables Turnover:
- The payables turnover ratio measures how efficiently a company pays its suppliers for goods and services purchased on credit.
- Data is missing for payables turnover for most years, so a detailed analysis cannot be provided. However, a higher payables turnover ratio generally indicates the company is paying its suppliers more quickly.

4. Working Capital Turnover:
- This ratio shows how effectively a company utilizes its working capital to generate sales revenue.
- Cinemark's working capital turnover has fluctuated significantly over the years, with a sharp increase in 2022 before dropping in 2023 and missing data for 2024. A higher ratio indicates that the company is efficiently utilizing its working capital.

It is important for Cinemark to monitor these activity ratios regularly to identify any inefficiencies in its operations and address them promptly to improve overall business performance.

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Average number of days

Cinemark Holdings Inc's activity ratios indicate varying trends in its operational efficiency over the years.

1. Days of Inventory on Hand (DOH):
- Cinemark's DOH has shown a notable increase from 10.49 days in 2020 to 177.07 days in 2024. This suggests a significant increase in the average number of days it takes for the company to convert its inventory into sales.
- The rising DOH may indicate potential issues such as excess inventory levels or slowing demand for its products/services, which could tie up cash and impact liquidity.

2. Days of Sales Outstanding (DSO):
- Cinemark's DSO decreased significantly from 126.01 days in 2020 to 31.15 days in 2021. However, there is missing data for the following years, which makes it challenging to assess the company's efficiency in collecting receivables during those periods.
- A lower DSO is generally positive as it indicates that the company is collecting payments from customers more quickly.

3. Number of Days of Payables:
- The number of days of payables data is available only up to 2021, showing an increase from 58.84 days in 2020 to 65.34 days in 2021. However, data for subsequent years is missing, making it difficult to analyze the trend in the company's payment terms with suppliers.
- An increase in the number of days of payables could indicate that Cinemark is taking longer to pay its suppliers, which may help preserve cash in the short term but could strain relationships in the long run.

Overall, Cinemark's activity ratios suggest a need for closer monitoring of inventory management, collection efficiency, and payment practices to maintain optimal operational performance and financial health.

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Long-term

Cinemark Holdings Inc's long-term activity ratios reflect its efficiency in utilizing its assets over time.

1. Fixed asset turnover: This ratio measures how effectively the company is generating revenue from its fixed assets. Cinemark's fixed asset turnover has shown a significant improvement over the years, increasing from 0.34 in 2020 to 2.67 in 2024. This indicates that Cinemark is efficiently utilizing its fixed assets to generate revenue, with a notable spike in efficiency noted between 2022 and 2023.

2. Total asset turnover: This ratio evaluates the company's ability to generate revenue relative to its total assets. Cinemark's total asset turnover has also seen a remarkable improvement, escalating from 0.10 in 2020 to 2.71 in 2024. This rapid increase signifies that Cinemark has been adept at utilizing its total assets to generate revenue, with a particularly significant enhancement observed in the later years.

Overall, both fixed asset turnover and total asset turnover ratios depict Cinemark Holdings Inc as increasingly efficient in generating revenue from its assets, showcasing a positive trend in asset utilization and operational performance over the analyzed period.