Aramark Holdings (ARMK)

Activity ratios

Short-term

Turnover ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Inventory turnover 48.75 44.86 28.89 27.19 27.85 27.62 28.21 30.89 31.91 27.88 26.76 24.41 26.31 28.51 32.06 36.62 37.04 35.57 36.92 36.09
Receivables turnover 8.92 10.10 7.78 7.37 7.22 7.42 7.34 7.07 6.87 6.76 7.17 6.83 7.23 8.69 9.90 8.61 8.22 9.06 8.91 8.67
Payables turnover 16.35 14.24 16.34 14.56 14.53 11.53 16.00 14.49 15.98 12.52 15.96 15.13 17.44 18.76 22.13 18.64 17.23 14.64 17.70 15.84
Working capital turnover 28.91 104.78 22.01 27.59 22.10 2,613.53 23.62 37.65 24.14 285.26 39.43 9.03 9.59 5.34 5.78 11.74 30.51 — 33.83 50.99

Aramark Holdings' activity ratios provide insights into its efficiency in managing its inventory, receivables, payables, and working capital.

1. Inventory turnover: Aramark Holdings has shown a consistent ability to turn over its inventory rapidly, with a significant increase in the latest period compared to the previous quarters. The high inventory turnover ratio indicates strong sales relative to the level of inventory held.

2. Receivables turnover: The company's receivables turnover has been fluctuating over the quarters but remains at a moderate level. A higher ratio suggests that Aramark is collecting its receivables efficiently, although there is room for improvement.

3. Payables turnover: Aramark has been efficient in managing its payables, as indicated by the consistently high turnover ratios. A high payables turnover ratio suggests the company is effectively managing its trade credit obligations.

4. Working capital turnover: The working capital turnover ratio has shown significant fluctuations, with extremely high values in some periods, indicating potential anomalies or exceptional circumstances. It is important to investigate the reasons behind such fluctuations to understand the company's working capital efficiency.

Overall, Aramark Holdings demonstrates strong efficiency in managing its inventory and payables, while there may be opportunities to enhance the efficiency of its receivables management. Further analysis is required to understand the reasons behind the significant fluctuations in the working capital turnover ratio.

Average number of days

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Days of inventory on hand (DOH) days 7.49 8.14 12.63 13.43 13.10 13.22 12.94 11.82 11.44 13.09 13.64 14.95 13.87 12.80 11.39 9.97 9.86 10.26 9.89 10.11
Days of sales outstanding (DSO) days 40.94 36.12 46.93 49.55 50.58 49.18 49.70 51.62 53.16 54.00 50.92 53.42 50.47 42.00 36.88 42.37 44.39 40.30 40.97 42.08
Number of days of payables days 22.33 25.64 22.33 25.06 25.13 31.65 22.82 25.20 22.84 29.15 22.87 24.12 20.92 19.46 16.49 19.59 21.18 24.94 20.62 23.04

To analyze Aramark Holdings' activity ratios based on the provided data, we will consider the following key metrics:

1. Days of Inventory on Hand (DOH): This metric indicates the number of days it takes for the company to sell its inventory. A lower DOH value suggests efficient inventory management and inventory turnover. Aramark Holdings' DOH has fluctuated over the periods, with the range being between 7.49 days to 14.95 days. The downward trend from 2022 to 2023 indicates a potential improvement in inventory management efficiency.

2. Days of Sales Outstanding (DSO): DSO reflects the average number of days it takes for the company to collect revenue from credit sales. A lower DSO implies faster collection of receivables. Aramark Holdings' DSO has varied across the periods, ranging from 36.12 days to 54.00 days. The decreasing trend in DSO from 2022 to 2023 signals a positive trend in collecting revenue more promptly.

3. Number of Days of Payables: This metric shows the average number of days the company takes to pay its suppliers. A higher number of days indicates that the company is taking longer to settle its payables. Aramark Holdings' days of payables range from 16.49 days to 31.65 days. The fluctuation in this ratio may reflect changes in the company's payment terms and supplier relationships.

In summary, Aramark Holdings has shown improvements in inventory management efficiency and collection of receivables based on the decreasing trend in DOH and DSO ratios. The fluctuations in the days of payables indicate varying payment terms and strategies with suppliers. Monitoring and managing these activity ratios closely will help assess the company's operational performance and efficiency in managing its working capital.

Long-term

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Fixed asset turnover 13.15 13.97 9.18 8.60 8.17 7.85 7.47 7.01 6.47 5.80 5.49 5.01 5.39 6.06 6.82 7.49 7.51 7.50 7.62 7.60
Total asset turnover 1.58 1.18 1.22 1.12 1.09 1.06 1.01 0.96 0.90 0.82 0.78 0.69 0.75 0.79 0.90 1.07 1.14 1.19 1.19 1.19

Aramark Holdings' fixed asset turnover ratio has shown a stable and generally increasing trend over the past five years, indicating the company's ability to generate revenue in relation to its investment in fixed assets. The ratio increased from 5.39 in Q1 2021 to 13.97 in Q3 2023, suggesting improved efficiency in utilizing fixed assets to generate sales.

In contrast, the total asset turnover ratio has fluctuated over the same period, indicating varying levels of revenue generated relative to the total assets employed. The ratio peaked at 1.58 in Q4 2019, then started declining and reached its lowest point of 0.69 in Q1 2021, before recovering to 1.18 in Q2 2023.

Overall, while the fixed asset turnover ratio shows a positive trend, the total asset turnover ratio reflects some inconsistency in utilizing the company's total assets to generate sales. It would be important to further evaluate the reasons behind the fluctuations in the total asset turnover ratio to better understand Aramark Holdings' overall efficiency in asset utilization.