Hyatt Hotels Corporation (H)

The liquidity ratios of Hyatt Hotels Corporation, as indicated by the current ratio, quick ratio, and cash ratio, depict its ability to meet short-term obligations efficiently.

1. Current Ratio: Hyatt's current ratio has decreased from 2.63 in 2020 to 0.62 in 2023. This signifies a substantial decline in the company's ability to cover its current liabilities with current assets. The current ratio below 1 suggests that Hyatt may face challenges in meeting its short-term obligations using its current asset base.

2. Quick Ratio: The quick ratio shows a similar declining trend, from 2.58 in 2020 to 0.57 in 2023. This ratio excludes inventory from current assets, providing a more conservative measure of liquidity. The decreasing trend indicates potential issues in meeting short-term obligations without relying on inventory.

3. Cash Ratio: Hyatt's cash ratio has also decreased over the years, from 2.26 in 2020 to 0.32 in 2023. This ratio represents the proportion of current liabilities that can be covered by cash and cash equivalents. A declining cash ratio suggests a reduced ability to settle short-term obligations with cash holdings alone.

Overall, the decreasing trend in all three liquidity ratios indicates a potential liquidity strain for Hyatt Hotels Corporation, raising concerns about its ability to meet short-term financial obligations. Further analysis of the company's cash management practices and working capital efficiency may be warranted to address these liquidity challenges.

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Additional liquidity measure

The cash conversion cycle of Hyatt Hotels Corporation has fluctuated significantly over the past five years. In 2023, the company's cash conversion cycle increased to 5.94 days, indicating that it takes approximately 5.94 days for the company to convert its investments in inventory and accounts receivable into cash. This represents a notable increase from the previous year where the cycle was only 1.16 days.

In 2021, Hyatt Hotels Corporation operated with a negative cash conversion cycle of -2.90 days, suggesting that the company had a more efficient cash flow management system that allowed it to convert its investments into cash before paying its suppliers. However, this was a sharp decrease from the substantial positive cash conversion cycle of 38.87 days in 2020, indicating potential inefficiencies in managing inventory and receivables.

In 2019, the cash conversion cycle was 17.71 days, showing a moderate efficiency in converting assets into cash compared to the following years. Overall, the fluctuations in the cash conversion cycle of Hyatt Hotels Corporation highlight the importance of effective working capital management in optimizing cash flow and operational efficiency.