Domino’s Pizza Inc (DPZ)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 33.17 | 35.41 | 39.06 | 37.83 | 41.85 |
| Receivables turnover | 15.84 | 17.62 | 17.07 | 16.84 | 17.21 |
| Payables turnover | 25.90 | 32.20 | 29.16 | 26.70 | 19.95 |
| Working capital turnover | 16.59 | 17.86 | 16.15 | 10.33 | 10.84 |
The activity ratios of Dominos Pizza Inc indicate how efficiently the company is managing its resources and operations.
1. Inventory turnover:
Dominos Pizza Inc's inventory turnover has been declining over the past five years, from 41.85 in 2019 to 33.17 in 2023. This suggests that the company is selling its inventory at a slower rate, which may indicate potential issues with demand or overstocking of inventory.
2. Receivables turnover:
The receivables turnover ratio has also decreased over the years, indicating a longer time taken by the company to collect its receivables. This could be due to changing customer payment behavior or credit policies.
3. Payables turnover:
The payables turnover ratio has fluctuated over the years but shows an increasing trend, reaching 25.9 in 2023. This suggests that Dominos Pizza Inc is taking longer to pay its suppliers, which could impact its relationship with vendors or result in potential liquidity issues.
4. Working capital turnover:
The working capital turnover ratio indicates how effectively Dominos Pizza Inc is utilizing its working capital to generate revenue. The ratio has generally been stable with some fluctuations, but it shows an increasing trend overall. This implies that the company is generating more revenue per dollar of working capital, which is a positive sign for operational efficiency.
Overall, Dominos Pizza Inc's activity ratios reflect both strengths and areas for improvement in its operational efficiency and management of resources.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 11.00 | 10.31 | 9.34 | 9.65 | 8.72 |
| Days of sales outstanding (DSO) | days | 23.04 | 20.71 | 21.39 | 21.68 | 21.21 |
| Number of days of payables | days | 14.09 | 11.34 | 12.52 | 13.67 | 18.30 |
To analyze Dominos Pizza Inc's activity ratios, we will focus on Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables. These ratios help assess how efficiently the company manages its inventory, collects receivables, and pays its suppliers.
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows an increase over the past five years from 8.72 days in 2019 to 11.00 days in 2023. This suggests that Dominos Pizza Inc is holding onto its inventory for a longer period before it is sold.
- A higher DOH may indicate that the company is facing challenges in managing its inventory efficiently, which could tie up its working capital.
2. Days of Sales Outstanding (DSO):
- The DSO has fluctuated slightly over the past five years, ranging from 20.71 days in 2023 to 21.21 days in 2019. This indicates the average number of days it takes for the company to collect payment from its customers.
- A stable DSO suggests that Dominos Pizza Inc has been able to maintain consistent control over its accounts receivable collection process.
3. Number of Days of Payables:
- The Number of Days of Payables has shown a decreasing trend over the years, reducing from 18.30 days in 2019 to 14.09 days in 2023. This indicates the average number of days the company takes to pay its suppliers.
- A decreasing trend in payables days may suggest that Dominos Pizza Inc is paying its suppliers more quickly, which could impact its cash flow management.
In conclusion, Dominos Pizza Inc's activity ratios reflect some areas of concern such as a rising DOH and a decreasing trend in payables days. The company may need to focus on improving its inventory management and supplier payment practices to enhance its overall operational efficiency and working capital management.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 14.72 | 15.01 | 13.45 | 13.85 | 14.90 |
| Total asset turnover | 2.67 | 2.83 | 2.61 | 2.63 | 2.62 |
Dominos Pizza Inc's long-term activity ratios reflect the company's efficiency in utilizing its fixed assets and total assets to generate revenue over the past five years. The fixed asset turnover ratio has ranged between 13.45 to 15.01, indicating that the company generates approximately $14.72 to $15.01 in revenue for every dollar invested in fixed assets. This suggests that Dominos Pizza Inc has been consistently efficient in deploying its fixed assets to drive sales.
In terms of total asset turnover, the company's performance has ranged from 2.61 to 2.83, with a recent ratio of 2.67. This indicates that for each dollar of total assets, Dominos Pizza Inc generates approximately $2.67 in revenue. The upward trend in total asset turnover signals an improvement in the company's overall asset utilization efficiency.
Overall, Dominos Pizza Inc has maintained strong long-term activity ratios, demonstrating effective management of its assets to drive revenue generation. The consistent performance in both fixed asset turnover and total asset turnover ratios reflects the company's operational efficiency and ability to generate higher sales relative to its asset base.