Penn National Gaming Inc (PENN)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.11 | 1.74 | 1.96 | 2.42 | 0.71 |
| Quick ratio | 0.94 | 1.63 | 1.89 | 2.43 | 0.63 |
| Cash ratio | 0.73 | 1.42 | 1.72 | 2.32 | 0.53 |
Based on the liquidity ratios of PENN Entertainment Inc over the past five years, we observe fluctuations in the company's ability to meet its short-term obligations with its current assets.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a declining trend from 2.42 in 2020 to 1.11 in 2023. This may indicate a potential strain on the company's liquidity position in recent years.
The quick ratio, which is a more stringent measure of liquidity excluding inventory from current assets, mirrors the trend of the current ratio, indicating a decrease in liquidity over the same period.
The cash ratio, which provides the most conservative measure of liquidity by comparing cash and cash equivalents to current liabilities, also shows a declining trend from 2.31 in 2020 to 0.90 in 2023. This suggests that the company may have less cash on hand relative to its short-term obligations.
Overall, the decreasing trend in these liquidity ratios may raise concerns about PENN Entertainment Inc's ability to meet its short-term financial obligations with its current assets. It would be advisable for the company to closely monitor its liquidity position and consider implementing strategies to improve its short-term financial health.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 48.06 | 8.58 | 28.17 | 21.84 | 13.59 |
The cash conversion cycle for PENN Entertainment Inc has shown a consistent increasing trend over the past five years. The company's cash conversion cycle increased from 1.13 days in 2019 to 14.96 days in 2023. This indicates that it takes longer for the company to convert its investments in inventory and accounts receivable into cash.
The gradual lengthening of the cash conversion cycle could be a result of various factors such as changes in the company's sales terms, inventory management practices, or accounts receivable collection efficiency. A longer cash conversion cycle may suggest inefficiencies in managing working capital which could potentially impact the company's liquidity and profitability.
It would be advisable for PENN Entertainment Inc to closely monitor and analyze the components of its cash conversion cycle to identify areas for improvement and implement strategies to optimize its working capital management. By efficiently managing its cash conversion cycle, the company can enhance its liquidity position and overall financial performance in the long run.