Chipotle Mexican Grill Inc. (NYSE:CMG)

The analysis of liquidity ratios over the reported periods reveals distinct patterns and fluctuations in the company's short-term financial stability measures.

Current Ratio

The current ratio exhibits moderate variability, starting at 1.62 in the first quarter of 2020, followed by a dip to a low of 1.26 in the second quarter of 2022. After this trough, the ratio generally recovers and stabilizes around the mid-to-high 1.5 range through to mid-2025, peaking at 1.78 in the third quarter of 2021. The ratio’s movement indicates fluctuations in current asset management but remains consistently above 1, suggesting adequate coverage of current liabilities across the periods.

Quick Ratio

The quick ratio trends slightly lower than the current ratio, signaling a more conservative measure that excludes inventory. It starts at 1.42 in early 2020, then declines to a low near 1.02 in mid-2022. Following this low, a general upward trend is observed, reaching levels around 1.5 by mid-2024, before showing minor decreases thereafter. The pattern suggests periods of tighter liquidity when excluding inventory assets, but an improvement in liquid asset availability in recent periods.

Cash Ratio

The cash ratio begins robustly at 1.32 in the first quarter of 2020, then steadily declines to about 0.92 in the second quarter of 2022. This decline reflects a drop in the most liquid assets relative to current liabilities. Subsequently, the ratio recovers, improving to around 1.4 by mid-2024. This recovery highlights an enhancement in the company's cash and cash equivalents, signaling stronger immediate liquidity following a period of relative weakness.

Overall, the liquidity position experienced a downturn during 2021 and early 2022 across all three ratios, reaching lows particularly in the cash and quick ratios. Since then, a constructive recovery trend is evident, restoring the liquidity buffers to healthier levels by 2024 and sustaining them through mid-2025. This suggests an improved management of liquid assets and current liabilities, contributing to a more favorable short-term financial position.

Current Assets

Current assets exhibit a generally positive trend over the period, with values increasing from approximately 1,075,501 thousand US dollars at the start of 2020 to a peak of 1,869,125 thousand US dollars by mid-2025. There are fluctuations within this upward trend; notable declines occur in early 2022, followed by recovery and continued growth through 2023 and into 2024. This pattern indicates strong asset growth overall, despite short-term volatility.

Current Liabilities

Current liabilities have also risen throughout the timeline, moving from around 665,795 thousand US dollars in early 2020 to over 1,130,000 thousand US dollars by mid-2025. The increase is relatively steady, with occasional acceleration, such as between late 2022 and 2023. This consistent growth in liabilities may reflect expanded operational activities or increased short-term obligations.

Current Ratio

The current ratio, a key liquidity indicator, varies within a range of approximately 1.26 to 1.78 during the observed periods. It started around 1.62 in early 2020, then dipped to near 1.26 by mid-2022, indicating reduced liquidity at that time. Following this trough, the ratio improved steadily, reaching about 1.65 by mid-2025. This suggests that despite rising liabilities, current assets have maintained relatively comfortable levels to cover short-term obligations, with liquidity conditions strengthening in more recent periods.

Summary

Overall, the data reflects a company experiencing growth in both current assets and current liabilities. The liquidity, as measured by the current ratio, showed some weakening particularly around 2022 but improved steadily thereafter. The general increase in current assets outpacing liabilities in the longer term is a positive sign for short-term financial health, indicating an adequate buffer to meet current liabilities. However, the fluctuations in both asset and liability values suggest periodic adjustments in working capital management and operational scale.

Total quick assets

The total quick assets exhibited a general upward trend over the analyzed periods. Starting at approximately 945 million US dollars in March 2020, the value increased steadily, peaking around the middle of 2023 with values upwards of 1.5 billion US dollars. Although there were some short-term decreases, such as between the first and second quarters of 2022, the overall trajectory shows growth, suggesting a strengthening of the company’s liquid assets over time.

Current liabilities

Current liabilities also increased over the period, rising from approximately 666 million US dollars at the beginning of 2020 to over 1.1 billion US dollars by mid-2025. Notably, the increase was more gradual with some fluctuations; for instance, a slight decline was observed around late 2023 to early 2024. The growth in current liabilities, while consistent, was somewhat less steep compared to the rise in quick assets, indicating a controlled increase in short-term obligations.

Quick ratio

The quick ratio demonstrated variability but showed an overall positive trend, reflecting an improving short-term liquidity position. Starting at 1.42 in the first quarter of 2020, the ratio declined slightly during 2020 and early 2021, reaching lows near 1.02 in mid-2022. Subsequently, there was a marked recovery, with the ratio climbing above 1.4 from mid-2023 onwards and peaking around 1.52 by the middle of 2024. This indicates that the company's quick assets have generally grown faster than its current liabilities, enhancing its ability to cover short-term liabilities without relying on inventory sales.

Overall analysis

Over the five-year span, the company’s liquid asset base has expanded significantly, outpacing the growth in current liabilities. This improvement in quick ratio is indicative of a stronger liquidity position, suggesting enhanced financial stability and reduced short-term risk. Fluctuations in quick assets and current liabilities reflect typical quarterly variances but do not detract from the overall positive trend in liquidity management. The upward trend in quick assets especially from 2022 onwards aligns with the increasing quick ratio, which may result from strategic asset management and operational improvements.

Cash Assets Trend

The total cash assets display a generally fluctuating pattern with periods of growth and decline. Initially, from March 2020 to December 2020, cash assets grew from approximately 881 million USD to nearly 952 million USD, showing moderate positive momentum. The first half of 2021 saw a slight increase, peaking near 1.08 billion USD at the end of 2021. However, a significant decline followed throughout 2022, bringing cash assets down to roughly 899 million USD by December 2022. Starting in 2023, the company experienced a strong recovery with cash balances rising to approximately 1.46 billion USD by June 2023. A mild decrease occurred toward the end of 2023, but the assets rebounded again in 2024 to surpass previous peaks, reaching about 1.55 billion USD by mid-2025.

Current Liabilities Trend

Current liabilities generally increased over the analyzed period. From March 2020 to December 2021, liabilities rose steadily from around 666 million USD to approximately 874 million USD. Following this, there was a somewhat volatile but overall upward trend through 2022 and into early 2023, with liabilities reaching nearly 1.09 billion USD by September 2023. During late 2023 and throughout 2024, liabilities fluctuated slightly but stayed at elevated levels ranging between 1.03 billion USD and 1.17 billion USD, suggesting growing short-term obligations over time.

Cash Ratio Analysis

The cash ratio, which measures liquidity by comparing cash assets to current liabilities, mirrored the movement in cash assets but was influenced by the rising liabilities. In early 2020, the ratio stood above 1.3, indicating strong liquidity. It then declined gradually through 2020 and early 2021, dropping below 1.0 during mid-2022, which signals a tighter liquidity position relative to current liabilities during that period. The ratio recovered significantly in 2023, peaking at around 1.38 in mid-2023. This positive liquidity condition persisted with some fluctuation into 2024, maintaining a level above 1.2 and reaching approximately 1.37 by mid-2025, indicating that cash and equivalents continued to cover current liabilities comfortably.

Overall Insights

The company's liquidity position, as assessed through total cash assets and cash ratio, showed resilience despite fluctuations, with strong recoveries after phases of decline, particularly noticeable in 2023 and continuing into 2024 and 2025. Current liabilities displayed a steady increase over the years, which pressures liquidity but was counterbalanced by the cash asset growth. The maintenance of a cash ratio above 1.0 for the majority of periods suggests a generally sound short-term financial position. The trends imply prudent cash management amid rising liabilities, ensuring sustained capacity to meet short-term obligations across the reported quarters.