MGM Resorts International (MGM)

Based on the provided data, let's analyze the liquidity ratios of MGM Resorts International:

1. Current Ratio:
- The current ratio measures the company's ability to meet short-term obligations with its current assets. A higher current ratio is generally preferred as it indicates a healthier liquidity position.
- Between December 31, 2020, and December 31, 2024, MGM Resorts International's current ratio has decreased from 3.21 to 1.30. This decline suggests a reduction in the company's ability to cover its short-term liabilities with its current assets over the period.

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. A quick ratio above 1 indicates good liquidity.
- MGM Resorts International's quick ratio has also declined from 3.53 on December 31, 2020, to 0.72 on December 31, 2024. This significant decrease indicates a potential strain on the company's ability to meet its short-term obligations without relying on inventory.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on the ability to cover current liabilities with cash and cash equivalents.
- The cash ratio for MGM Resorts International decreased from 3.53 on December 31, 2020, to 0.72 on December 31, 2024, suggesting a diminishing ability to cover current liabilities with available cash reserves only.

Overall, the decreasing trend in these liquidity ratios for MGM Resorts International indicates a potential weakness in the company's ability to meet short-term obligations using its current assets and cash reserves. It would be important for the company to closely monitor and manage its liquidity position to ensure financial stability and operational continuity.

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Additional liquidity measure

The cash conversion cycle of MGM Resorts International has shown a decreasing trend over the past five years, indicating an improvement in its liquidity management and operational efficiency.

As of December 31, 2020, the cash conversion cycle was 9.34 days, but by December 31, 2024, it had decreased to 5.46 days. This trend suggests that the company has been able to reduce the time it takes to convert its investments in inventory and receivables into cash, which is a positive indicator of effective working capital management.

A lower cash conversion cycle indicates that MGM Resorts International is able to generate cash quickly from its operations, potentially reducing its reliance on external financing sources and improving its overall financial health. This trend is favorable as it can lead to increased profitability and financial stability for the company.