Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Hilton Worldwide Holdings Inc., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | 0.70 | 0.85 | 0.95 | 1.73 | 0.73 | |
| Quick ratio | 0.63 | 0.77 | 0.85 | 1.66 | 0.66 | |
| Cash ratio | 0.24 | 0.38 | 0.50 | 1.34 | 0.22 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Current Ratio
- The current ratio exhibited a significant increase from 0.73 in 2019 to a peak of 1.73 in 2020, indicating an improved ability to cover short-term liabilities during this period. However, the ratio declined to 0.95 in 2021 and continued a downward trend to 0.85 in 2022, further decreasing to 0.7 in 2023. This suggests a gradual reduction in liquidity relative to current liabilities after the initial improvement in 2020.
- Quick Ratio
- The quick ratio followed a pattern similar to the current ratio, rising sharply from 0.66 in 2019 to 1.66 in 2020, suggesting enhanced short-term liquidity when excluding inventory. Thereafter, it decreased to 0.85 in 2021, 0.77 in 2022, and 0.63 in 2023. This decline over the last three years points to a diminishing capacity to meet immediate obligations without relying on inventory sales.
- Cash Ratio
- The cash ratio showed a notable increase from 0.22 in 2019 to 1.34 in 2020, indicating a substantial buildup of the most liquid assets. Subsequently, it decreased to 0.5 in 2021, 0.38 in 2022, and 0.24 in 2023. The sharp rise followed by a steady decline implies that the company initially increased its cash holdings significantly, but these levels were not sustained in the following years.
- Overall Liquidity Trends
- The liquidity ratios collectively demonstrate a marked improvement in 2020 across all measures, likely reflecting a strategic response to market conditions or operational needs at that time. However, after this peak, there is a consistent downward trend in liquidity ratios through 2023, which may indicate increasing short-term financial pressures or changes in working capital management. The decline in cash ratio alongside current and quick ratios suggests the company is holding fewer liquid assets relative to its obligations, potentially impacting its ability to cover short-term liabilities promptly.
Current Ratio
Hilton Worldwide Holdings Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 2,614) | 2,870) | 2,871) | 4,202) | 2,093) | |
| Current liabilities | 3,722) | 3,372) | 3,019) | 2,431) | 2,871) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 0.70 | 0.85 | 0.95 | 1.73 | 0.73 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Airbnb Inc. | 1.66 | 1.86 | 1.95 | 1.73 | — | |
| Booking Holdings Inc. | 1.28 | 1.86 | 2.10 | 3.56 | — | |
| Chipotle Mexican Grill Inc. | 1.57 | 1.28 | 1.58 | 1.73 | — | |
| DoorDash, Inc. | 1.64 | 1.86 | 2.59 | 3.94 | — | |
| McDonald’s Corp. | 1.16 | 1.43 | 1.78 | 1.01 | — | |
| Starbucks Corp. | 0.78 | 0.77 | 1.20 | 1.06 | 0.92 | |
| Current Ratio, Sector | ||||||
| Consumer Services | 1.28 | 1.49 | 1.77 | 1.73 | — | |
| Current Ratio, Industry | ||||||
| Consumer Discretionary | 1.20 | 1.15 | 1.25 | 1.19 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= 2,614 ÷ 3,722 = 0.70
2 Click competitor name to see calculations.
- Current Assets
- The current assets experienced a significant increase from 2,093 million USD in 2019 to 4,202 million USD in 2020, followed by a decline to 2,871 million USD in 2021. The level remained relatively stable in 2022 at 2,870 million USD before decreasing further to 2,614 million USD in 2023. This suggests a peak in liquidity in 2020 with a subsequent reduction over the following years.
- Current Liabilities
- Current liabilities decreased from 2,871 million USD in 2019 to 2,431 million USD in 2020. However, there was a consistent upward trend from 2020 onwards, rising to 3,019 million USD in 2021, 3,372 million USD in 2022, and reaching 3,722 million USD in 2023. This indicates increasing short-term obligations over the recent years.
- Current Ratio
- The current ratio, indicating short-term liquidity, improved markedly from 0.73 in 2019 to 1.73 in 2020, reflecting stronger ability to cover current liabilities with current assets during that year. However, the ratio declined sharply in subsequent years, falling below 1.0 in 2021 (0.95) and continuing to decrease to 0.85 in 2022 and further to 0.7 in 2023. This downward trend suggests a weakening liquidity position and potential challenges in meeting short-term liabilities.
- Overall Analysis
- The data illustrates a substantial improvement in liquidity during 2020, likely driven by increased current assets and reduced current liabilities. Since then, current assets have decreased while current liabilities have grown, resulting in a declining current ratio below 1.0 from 2021 onwards. The continuous decrease in the current ratio implies rising short-term financial risk and may warrant closer monitoring of working capital management.
Quick Ratio
Hilton Worldwide Holdings Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 800) | 1,209) | 1,427) | 3,218) | 538) | |
| Restricted cash and cash equivalents | 75) | 77) | 85) | 45) | 92) | |
| Accounts receivable, net of allowance for credit losses | 1,487) | 1,327) | 1,068) | 771) | 1,261) | |
| Total quick assets | 2,362) | 2,613) | 2,580) | 4,034) | 1,891) | |
| Current liabilities | 3,722) | 3,372) | 3,019) | 2,431) | 2,871) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.63 | 0.77 | 0.85 | 1.66 | 0.66 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Airbnb Inc. | 1.62 | 1.83 | 1.91 | 1.69 | — | |
| Booking Holdings Inc. | 1.20 | 1.73 | 2.00 | 3.38 | — | |
| Chipotle Mexican Grill Inc. | 1.37 | 1.09 | 1.35 | 1.28 | — | |
| DoorDash, Inc. | 1.38 | 1.54 | 2.33 | 3.67 | — | |
| McDonald’s Corp. | 1.03 | 1.24 | 1.64 | 0.90 | — | |
| Starbucks Corp. | 0.55 | 0.48 | 0.93 | 0.75 | 0.59 | |
| Quick Ratio, Sector | ||||||
| Consumer Services | 1.15 | 1.31 | 1.61 | 1.54 | — | |
| Quick Ratio, Industry | ||||||
| Consumer Discretionary | 0.86 | 0.81 | 0.93 | 0.89 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 2,362 ÷ 3,722 = 0.63
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in the liquidity position over the analyzed periods. The total quick assets experienced a significant increase from 2019 to 2020, nearly doubling to 4,034 million US dollars. This was followed by a sharp decline in 2021 to 2,580 million US dollars, with minor variations in the subsequent years, settling at 2,362 million US dollars by the end of 2023.
Conversely, current liabilities demonstrated a generally increasing trend after an initial decline in 2020. Starting from 2,871 million US dollars in 2019, current liabilities decreased to 2,431 million US dollars in 2020, but then steadily rose each year thereafter, reaching 3,722 million US dollars in 2023.
This inverse movement between quick assets and current liabilities is reflected in the quick ratio. The quick ratio peaked at 1.66 in 2020, indicating strong short-term liquidity at that time, but then diminished considerably in the following years. The ratio fell below 1.0 from 2021 onwards and dropped further to 0.63 by the end of 2023, suggesting a weaker liquidity position and potential challenges in meeting short-term obligations with the most liquid assets.
- Total Quick Assets:
- Initial growth in 2020 followed by a notable decline, with a generally decreasing trend from 2021 to 2023.
- Current Liabilities:
- Decreased in 2020 but showed a consistent rising trend from 2021 through 2023.
- Quick Ratio:
- Peaked in 2020 indicating strong liquidity but continuously declined afterward, falling below 1 and ending at 0.63 in 2023.
Overall, the data indicates that while liquidity was robust in 2020, the company's ability to cover short-term liabilities with liquid assets weakened in subsequent years, which may warrant further attention to working capital management strategies.
Cash Ratio
Hilton Worldwide Holdings Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 800) | 1,209) | 1,427) | 3,218) | 538) | |
| Restricted cash and cash equivalents | 75) | 77) | 85) | 45) | 92) | |
| Total cash assets | 875) | 1,286) | 1,512) | 3,263) | 630) | |
| Current liabilities | 3,722) | 3,372) | 3,019) | 2,431) | 2,871) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.24 | 0.38 | 0.50 | 1.34 | 0.22 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Airbnb Inc. | 1.01 | 1.21 | 1.31 | 1.24 | — | |
| Booking Holdings Inc. | 0.95 | 1.46 | 1.79 | 3.23 | — | |
| Chipotle Mexican Grill Inc. | 1.26 | 0.98 | 1.23 | 1.16 | — | |
| DoorDash, Inc. | 1.23 | 1.38 | 2.13 | 3.47 | — | |
| McDonald’s Corp. | 0.67 | 0.68 | 1.17 | 0.56 | — | |
| Starbucks Corp. | 0.42 | 0.35 | 0.81 | 0.63 | 0.45 | |
| Cash Ratio, Sector | ||||||
| Consumer Services | 0.84 | 0.98 | 1.30 | 1.29 | — | |
| Cash Ratio, Industry | ||||||
| Consumer Discretionary | 0.48 | 0.47 | 0.64 | 0.59 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 875 ÷ 3,722 = 0.24
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibited significant fluctuation over the five-year period. Starting at 630 million US dollars in 2019, there was a marked increase to a peak of 3,263 million in 2020. Following this peak, cash assets decreased substantially to 1,512 million in 2021, then continued to decline to 1,286 million in 2022 and further to 875 million in 2023. This trend indicates a strong liquidity position in 2020, which gradually diminished in subsequent years.
- Current Liabilities
- Current liabilities showed an increasing trend throughout the period. Beginning at 2,871 million US dollars in 2019, liabilities decreased slightly to 2,431 million in 2020, but then rose consistently each year thereafter: 3,019 million in 2021, 3,372 million in 2022, and reaching 3,722 million in 2023. This steady increase suggests growing short-term obligations over time.
- Cash Ratio
- The cash ratio, a measure of liquidity comparing cash assets to current liabilities, reflected the changes in cash and liabilities. It was relatively low at 0.22 in 2019 and increased sharply to 1.34 in 2020, indicating a strong liquidity position. However, the ratio decreased progressively in the following years to 0.50 in 2021, 0.38 in 2022, and 0.24 in 2023, approaching the initial low level from 2019. This decline suggests a weakening ability to cover current liabilities with cash and cash equivalents over time.
- Overall Analysis
- The data reveal a notable liquidity improvement in 2020, potentially linked to unusual financial activities or external conditions, followed by a downward trend through 2023. The rapid increase in current liabilities accompanied by the decline in cash assets and cash ratio highlights a growing pressure on short-term financial obligations and a potentially more constrained liquidity position. These trends warrant close monitoring of liquidity management and working capital strategies.