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).
The liquidity profile of the organization is characterized by a significant volatility spike in 2020, followed by a consistent downward trend toward pre-2020 levels by the end of 2023.
- Current Ratio
- A substantial increase occurred in 2020, with the ratio rising from 0.73 to 1.73. However, a sequential decline followed, resulting in a ratio of 0.70 by December 31, 2023, indicating a return to a position where current liabilities exceed current assets.
- Quick Ratio
- The quick ratio mirrored the movement of the current ratio, peaking at 1.66 in 2020 before descending to 0.63 in 2023. This trend suggests that the liquid assets available to cover immediate obligations have diminished significantly since the 2020 peak.
- Cash Ratio
- The most pronounced volatility is observed in the cash ratio, which surged from 0.22 in 2019 to 1.34 in 2020. This rapid accumulation of cash was subsequently reversed over the following three years, ending at 0.24 in 2023.
The convergence of the current, quick, and cash ratios in 2023 suggests a stabilization of the liquidity structure. The narrow margin between the current and quick ratios throughout the analyzed period indicates that non-liquid current assets, such as inventory, have a negligible impact on the overall liquidity position.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
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 | — | — | |
| Booking Holdings Inc. | 1.28 | 1.86 | 2.10 | — | — | |
| Chipotle Mexican Grill Inc. | 1.57 | 1.28 | 1.58 | — | — | |
| DoorDash, Inc. | 1.64 | 1.86 | 2.59 | — | — | |
| McDonald’s Corp. | 1.16 | 1.43 | 1.78 | — | — | |
| Starbucks Corp. | 0.78 | 0.77 | 1.20 | 1.06 | — | |
| Current Ratio, Sector | ||||||
| Consumer Services | 1.28 | 1.49 | 1.77 | — | — | |
| Current Ratio, Industry | ||||||
| Consumer Discretionary | 1.20 | 1.15 | 1.25 | — | — | |
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.
The analysis of the liquidity position from 2019 to 2023 reveals a period of significant volatility followed by a sustained decline in the current ratio. The company's ability to cover short-term obligations with short-term assets peaked in 2020 before trending downward to its lowest point in the observed period by the end of 2023.
- Liquidity Volatility and Peak
- A substantial increase in liquidity is observed in 2020, where the current ratio rose sharply to 1.73. This spike was driven by a doubling of current assets, which increased from 2,093 million US$ in 2019 to 4,202 million US$ in 2020, combined with a reduction in current liabilities to 2,431 million US$.
- Post-2020 Downward Trend
- Following the 2020 peak, a consistent decline in the current ratio is evident. The ratio dropped to 0.95 in 2021, further decreased to 0.85 in 2022, and reached 0.70 by December 31, 2023. This trajectory indicates a diminishing margin of safety regarding short-term solvency.
- Asset and Liability Divergence
- The deterioration of the current ratio since 2021 is attributed to a simultaneous decrease in current assets and an increase in current liabilities. Between 2021 and 2023, current assets declined from 2,871 million US$ to 2,614 million US$, while current liabilities rose steadily from 3,019 million US$ to 3,722 million US$.
- Current Solvency Position
- As of December 31, 2023, the current ratio of 0.70 signifies that current liabilities exceed current assets. This represents a weaker liquidity position than that held in 2019, indicating that the organization relies more heavily on cash flow from operations or external financing to meet its immediate obligations.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Quick Ratio
Hilton Worldwide Holdings Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | — | — | |
| Booking Holdings Inc. | 1.20 | 1.73 | 2.00 | — | — | |
| Chipotle Mexican Grill Inc. | 1.37 | 1.09 | 1.35 | — | — | |
| DoorDash, Inc. | 1.38 | 1.54 | 2.33 | — | — | |
| McDonald’s Corp. | 1.03 | 1.24 | 1.64 | — | — | |
| Starbucks Corp. | 0.55 | 0.48 | 0.93 | 0.75 | — | |
| Quick Ratio, Sector | ||||||
| Consumer Services | 1.15 | 1.31 | 1.61 | — | — | |
| Quick Ratio, Industry | ||||||
| Consumer Discretionary | 0.86 | 0.81 | 0.93 | — | — | |
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 analysis of the quick ratio from 2019 to 2023 reveals a period of significant volatility followed by a sustained decline in short-term liquidity. The metric peaked in 2020 before trending downward for three consecutive years, eventually falling to its lowest point in the observed period by the end of 2023.
- Liquidity Peak and Volatility
- A substantial increase in the quick ratio is observed in 2020, rising from 0.66 to 1.66. This spike was driven by a sharp increase in total quick assets, which rose from US$ 1,891 million to US$ 4,034 million, while current liabilities simultaneously decreased to US$ 2,431 million. This indicates a temporary period of high liquidity where quick assets significantly exceeded short-term obligations.
- Post-2020 Erosion of Liquidity
- Following the 2020 peak, a consistent downward trajectory is evident. The quick ratio declined to 0.85 in 2021, 0.77 in 2022, and reached 0.63 by December 31, 2023. This trend suggests a diminishing ability to meet immediate liabilities using only the most liquid assets.
- Asset and Liability Divergence
- The deterioration of the quick ratio is the result of two simultaneous trends: a contraction in quick assets and an expansion of short-term debt. Total quick assets declined from the 2020 high of US$ 4,034 million to US$ 2,362 million by 2023. Concurrently, current liabilities increased steadily from US$ 2,431 million in 2020 to US$ 3,722 million in 2023, creating a widening gap that pressures the liquidity position.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
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 | — | — | |
| Booking Holdings Inc. | 0.95 | 1.46 | 1.79 | — | — | |
| Chipotle Mexican Grill Inc. | 1.26 | 0.98 | 1.23 | — | — | |
| DoorDash, Inc. | 1.23 | 1.38 | 2.13 | — | — | |
| McDonald’s Corp. | 0.67 | 0.68 | 1.17 | — | — | |
| Starbucks Corp. | 0.42 | 0.35 | 0.81 | 0.63 | — | |
| Cash Ratio, Sector | ||||||
| Consumer Services | 0.84 | 0.98 | 1.30 | — | — | |
| Cash Ratio, Industry | ||||||
| Consumer Discretionary | 0.48 | 0.47 | 0.64 | — | — | |
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.
The liquidity position exhibits a pattern of significant expansion in 2020 followed by a consistent contraction through 2023, returning to levels nearly identical to those observed in 2019.
- Cash Ratio Analysis
- The cash ratio experienced a sharp peak of 1.34 in 2020, representing a substantial increase from 0.22 in 2019. This metric subsequently underwent a continuous decline, falling to 0.50 in 2021, 0.38 in 2022, and finally 0.24 in 2023.
- Cash Asset Dynamics
- Total cash assets surged from $630 million in 2019 to $3,263 million in 2020. Following this peak, a sustained downward trend occurred, with assets reducing to $1,512 million in 2021 and ending at $875 million by the close of 2023.
- Current Liabilities Growth
- A consistent increase in current liabilities is noted from 2020 through 2023. Obligations rose from $2,431 million in 2020 to $3,722 million in 2023, creating a compounding effect that lowered the overall cash ratio as liquid assets diminished.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?