Marriott International Inc (MAR)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.40 | 0.43 | 0.45 | 0.57 | 0.49 |
| Quick ratio | 0.37 | 0.39 | 0.42 | 0.53 | 0.53 |
| Cash ratio | 0.05 | 0.04 | 0.07 | 0.22 | 0.23 |
Based on the provided data, let's analyze Marriott International Inc's liquidity ratios.
1. Current Ratio:
- The current ratio measures a company's ability to cover its short-term liabilities with its current assets.
- Marriott's current ratio has fluctuated over the years, starting at 0.49 in 2020, increasing to 0.57 in 2021, but then declining to 0.40 in 2024.
- A current ratio below 1 indicates that Marriott may have difficulty meeting its short-term obligations with its current assets. The decreasing trend in this ratio raises concerns about the company's liquidity position.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets.
- Marriott's quick ratio has also shown a downward trend over the years, decreasing from 0.53 in 2020 to 0.37 in 2024.
- A quick ratio below 1 suggests that Marriott may struggle to meet its short-term obligations without relying on selling inventory, which could be a risk factor.
3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, measuring a company's ability to cover its current liabilities with its cash and cash equivalents.
- Marriott's cash ratio has decreased significantly from 0.23 in 2020 to 0.05 in 2024, indicating a declining ability to cover short-term obligations with cash alone.
- A low cash ratio could imply that Marriott may have limited liquidity to cover unexpected expenses or downturns in its business.
In summary, based on the trend analysis of Marriott International Inc's liquidity ratios, there are concerns about the company's ability to meet its short-term financial obligations. The decreasing current, quick, and cash ratios over the years suggest a potential liquidity challenge that may require management's attention to improve working capital management and strengthen the company's liquidity position.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -75.88 | -107.49 | -133.26 | 911.50 | 641.50 |
The cash conversion cycle is a key metric that measures how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
Based on the data provided for Marriott International Inc, the cash conversion cycle has shown fluctuations over the years.
On December 31, 2020, the cash conversion cycle stood at 641.50 days, indicating that Marriott took a considerable amount of time to convert its investments into cash from sales.
By December 31, 2021, the cash conversion cycle increased significantly to 911.50 days, suggesting a further delay in the conversion process.
However, starting from December 31, 2022, the cash conversion cycle reversed its trend into negative figures, indicative of an improvement. Specifically, by December 31, 2022, the cash conversion cycle was reported at -133.26 days, followed by -107.49 days on December 31, 2023, and -75.88 days on December 31, 2024.
These negative values suggest that Marriott International Inc was able to convert its investments into cash flows from sales more efficiently than before. This improvement indicates a potentially more streamlined and effective operation in managing its working capital and generating cash inflows.
Overall, the downward trend in the cash conversion cycle reflects a positive development in Marriott's efficiency in managing its cash flow and working capital over the years.