Wyndham Hotels & Resorts Inc (WH)

Based on the data provided, we can observe the following trends in Wyndham Hotels & Resorts Inc liquidity ratios:

1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Wyndham Hotels & Resorts Inc had a relatively stable current ratio between March 2020 and June 2022, ranging from 1.11 to 3.14. However, the ratio started declining from September 2022 onwards, reaching its lowest point of 0.81 by December 31, 2023. Although there was a slight improvement in the ratio by June 30, 2024, it remained below 1, indicating potential liquidity concerns.

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. Similar to the current ratio, Wyndham Hotels & Resorts Inc experienced a decline in the quick ratio from March 2021 to December 31, 2023, falling below 1 during this period. This suggests that the company may have difficulty meeting its short-term obligations without relying on inventory.

3. Cash Ratio: The cash ratio focuses solely on the most liquid assets, cash and cash equivalents, to assess the company's ability to cover its current liabilities. Wyndham Hotels & Resorts Inc maintained a relatively stable cash ratio between March 2020 and September 2022, ranging from 0.13 to 1.94. However, the ratio declined significantly from March 2023 to December 31, 2024, reaching a low of 0.10. This downward trend indicates potential challenges in managing short-term obligations solely with available cash resources.

In summary, the liquidity ratios of Wyndham Hotels & Resorts Inc show a concerning trend of decreasing liquidity and a potential strain on the company's ability to meet its short-term financial obligations, especially evident in the declining current and cash ratios over the analyzed period.

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Additional liquidity measure

The cash conversion cycle of Wyndham Hotels & Resorts Inc fluctuated over the period under consideration. The company's cash conversion cycle measures the number of days it takes to convert its investments in inventory and accounts receivable into cash flows from sales.

From March 31, 2020, to June 30, 2020, there was a slight increase in the cash conversion cycle from 72.06 days to 75.96 days. This was followed by a significant improvement in efficiency as the cycle shortened to 44.27 days by September 30, 2020. However, by December 31, 2020, the cycle extended to 58.42 days before dropping to 59.45 days by March 31, 2021.

A notable improvement was seen in the efficiency of cash conversion cycle by June 30, 2021, as it decreased significantly to 15.36 days, and further reduced to 8.27 days by September 30, 2021. However, by December 31, 2021, the cycle extended substantially to 87.79 days, indicating potential challenges in managing cash flows.

Some improvement was observed by the end of March 31, 2022, as the cash conversion cycle decreased to 48.54 days, but by June 30, 2022, it increased again to 84.68 days. The company then saw significant improvement by September 30, 2022, as the cycle reduced to 17.61 days. This was followed by further improvement, with the cycle reducing to 13.39 days by December 31, 2022.

The cycle saw fluctuations in the following periods till June 30, 2024, where it turned negative indicating a more efficient conversion of cash. By December 31, 2024, the cycle stood at 31.67 days, implying a balanced approach to managing cash flows and working capital. Overall, monitoring and managing the cash conversion cycle is crucial for Wyndham Hotels & Resorts Inc to ensure efficient cash flow operations and effective utilization of resources.