Cinemark Holdings Inc (CNK)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.06 | 10.19 | 27.39 | 34.80 | 30.00 |
| Receivables turnover | — | — | 11.72 | 2.90 | 36.21 |
| Payables turnover | — | — | 5.59 | 6.20 | 7.10 |
| Working capital turnover | 8.28 | 41.58 | 12.85 | 1.93 | — |
Inventory turnover measures how efficiently a company manages its inventory. Cinemark Holdings Inc's inventory turnover has been relatively high and increasing over the past five years, indicating that the company is selling its inventory quickly. This implies effective inventory management and suggests that Cinemark is maintaining lean inventory levels.
Receivables turnover reflects how well a company collects payments from its customers. Cinemark's receivables turnover has been volatile but generally increasing. This indicates a positive trend in collecting receivables, although the turnover rate could still be improved.
Payables turnover measures how efficiently a company pays its suppliers. Cinemark's payables turnover has shown an increasing trend, suggesting that the company is taking longer to pay its suppliers. While extending payment terms can sometimes benefit cash flow, it may also strain supplier relationships if not managed carefully.
Working capital turnover measures how efficiently a company uses its working capital to generate sales. Cinemark's working capital turnover has been erratic, with gaps in data available. A higher working capital turnover typically indicates more efficient utilization of working capital to generate revenues.
Overall, the activity ratios of Cinemark Holdings Inc show improvements in inventory and payables turnover, but a potential need for further enhancement in receivables turnover and working capital efficiency.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 89.80 | 35.83 | 13.33 | 10.49 | 12.17 |
| Days of sales outstanding (DSO) | days | — | — | 31.15 | 126.01 | 10.08 |
| Number of days of payables | days | — | — | 65.34 | 58.84 | 51.40 |
Analyzing Cinemark Holdings Inc's activity ratios over the past five years indicates a notable trend in the management of its inventory, receivables, and payables.
1. Days of inventory on hand (DOH):
- Cinemark has shown efficiency in managing its inventory levels over the years, with a decreasing trend from 19.52 days in 2020 to 7.82 days in 2023.
- Maintaining a lower DOH implies that the company is selling its inventory quickly and efficiently, reducing the risk of obsolete inventory and associated holding costs.
2. Days of sales outstanding (DSO):
- Cinemark has demonstrated an improvement in collecting receivables, as reflected in the declining trend of DSO from 101.27 days in 2020 to 16.32 days in 2023.
- A lower DSO implies that the company is collecting payments from customers faster, thereby improving its cash conversion cycle and liquidity position.
3. Number of days of payables:
- Cinemark has actively managed its payables by reducing the number of days outstanding from 109.51 days in 2020 to 17.90 days in 2023.
- A lower number of days of payables indicates that the company is paying off its suppliers promptly, which can help maintain strong relationships with vendors and potentially negotiate better terms.
In conclusion, Cinemark Holdings Inc has exhibited positive improvements in its activity ratios, indicating enhanced efficiency in managing its working capital components. These trends suggest the company's effective utilization of resources and potential for improved financial performance and cash flow management.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.78 | 1.87 | 0.98 | 0.34 | 1.83 |
| Total asset turnover | 0.69 | 0.50 | 0.26 | 0.10 | 0.55 |
The long-term activity ratios of Cinemark Holdings Inc have shown fluctuations over the past five years. The fixed asset turnover ratio, which measures how efficiently the company is generating sales from its fixed assets, has varied significantly. In 2023, the fixed asset turnover ratio improved to 2.64, indicating that the company generated $2.64 in sales for every dollar of fixed assets invested. This increase suggests better utilization of fixed assets to generate revenue compared to the previous year.
On the other hand, the total asset turnover ratio, which assesses the company's ability to generate sales from its total assets, also witnessed fluctuations. In 2023, the total asset turnover ratio improved to 0.63, indicating that Cinemark generated $0.63 in sales for every dollar of total assets owned. This improvement reflects an enhanced efficiency in utilizing both fixed and current assets to generate revenue compared to the prior year.
Overall, the improving trends in both fixed asset turnover and total asset turnover ratios suggest that Cinemark Holdings Inc is becoming more efficient in generating sales from its assets over the years, which is a positive indicator of the company's operational performance and asset management.