Hilton Worldwide Holdings Inc (HLT)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.70 | 0.70 | 0.85 | 0.95 | 1.73 |
| Quick ratio | -1.99 | 0.61 | 0.75 | 0.83 | 1.64 |
| Cash ratio | -2.33 | 0.21 | 0.36 | 0.47 | 1.32 |
Hilton Worldwide Holdings Inc's liquidity ratios have shown a notable decline over the years based on the provided data.
1. Current Ratio: The current ratio, a measure of the company's ability to cover short-term liabilities with its current assets, decreased from 1.73 in 2020 to 0.70 in 2024. A current ratio of less than 1 indicates that Hilton may have difficulty meeting its short-term obligations with its current assets alone.
2. Quick Ratio: The quick ratio, which provides a more stringent measure of liquidity by excluding less liquid assets from current assets, also exhibited a declining trend from 1.64 in 2020 to -1.99 in 2024. A quick ratio below 1 or negative, as seen in 2024, suggests potential difficulties in meeting short-term obligations without relying on inventory.
3. Cash Ratio: The cash ratio, reflecting Hilton's ability to cover current liabilities with cash and cash equivalents, declined significantly from 1.32 in 2020 to -2.33 in 2024. A negative cash ratio implies that Hilton's cash and equivalents are insufficient to cover its current liabilities, indicating a potential risk in meeting short-term obligations without generating additional cash inflow.
In conclusion, the deteriorating liquidity ratios for Hilton Worldwide Holdings Inc suggest a heightened risk in covering short-term obligations using current assets alone, particularly considering the significant decline in quick and cash ratios in the most recent year. Management may need to closely monitor and address these liquidity concerns to ensure the company's financial stability and continued operations.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -214.40 | -101.46 | -69.59 | 5.80 | 23.06 |
Hilton Worldwide Holdings Inc's cash conversion cycle has shown significant improvement over the years. In 2020, the company had a relatively short cash conversion cycle of 23.06 days, indicating that it was efficient in converting its inventory and receivables into cash.
By the end of 2021, the cash conversion cycle further decreased to 5.80 days, reflecting an even quicker turnaround in converting its resources into cash. This reduction suggests that Hilton has been effective in managing its working capital and optimizing its cash flow cycle.
The trend continued in 2022 and beyond, as the cash conversion cycle turned negative, reaching -69.59 days by the end of 2022, -101.46 days by the end of 2023, and -214.40 days by the end of 2024. A negative cash conversion cycle indicates that Hilton is able to collect cash from its sales before paying its suppliers or vendors, resulting in a favorable position for the company in terms of liquidity and efficiency.
Overall, the declining cash conversion cycle trend signifies Hilton Worldwide Holdings Inc's strong working capital management and efficient cash flow operations during the analyzed period.