Brinker International Inc (EAT)

Short-term

Turnover ratios

The activity ratios for Brinker International Inc. over the periods presented indicate several trends in operational efficiency concerning inventory management, receivables collection, and payables payment processes.

Inventory Turnover:
The inventory turnover ratio exhibits a consistent upward trend from 34.78 times on June 30, 2021, to 40.32 times on June 30, 2023, with a further increase to 42.90 times projected for June 30, 2024. This increasing pattern suggests an improvement in inventory management efficiency, allowing the company to sell and replenish its inventory more frequently within each fiscal year. The higher turnover ratio may reflect enhanced sales performance or more effective inventory control mechanisms. Data beyond 2024 is unavailable, limiting analyses of subsequent periods.

Receivables Turnover:
Brinker’s receivables turnover ratio shows a significant rise from 37.84 times on June 30, 2021, to 67.87 times on June 30, 2023, with a further increase to 72.86 times projected for June 30, 2024. This trend indicates that the company is collecting its receivables more quickly over time. A higher receivables turnover ratio points toward improved credit policies, efficient collection processes, or both, resulting in a shorter cash conversion cycle. The absence of data beyond June 2024 precludes further long-term trend analysis.

Payables Turnover:
The payables turnover ratio demonstrates a positive upward trajectory from 22.20 times on June 30, 2021, to 28.90 times on June 30, 2023, followed by a decline to 23.59 times projected for June 30, 2024. The initial increase indicates that the company was paying its suppliers more frequently within the periods, enhancing supplier relationships or taking advantage of early payment discounts. The subsequent decline in 2024 suggests a potential lengthening of payment periods, which could be a strategic decision to optimize cash flow or reflect changes in supplier credit terms. Data for 2025 is not available, limiting longer-term analysis.

Working Capital Turnover:
No data is available for the working capital turnover ratio in the provided period, thus precluding assessment of operational efficiency related to working capital management.

Overall, the ratios indicate that Brinker International Inc. has been improving its operational efficiency in inventory and receivables management over the observed periods. The trends suggest the company is turning over its inventory and receivables more rapidly, which is favorable for cash flow and liquidity. Conversely, the payables turnover ratio initially increased but showed signs of decreasing in the latest period, potentially indicative of strategic changes in payment practices. The lack of data beyond 2024 limits the ability to assess whether these trends have continued or changed in subsequent periods.

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Average number of days

The activity ratios for Brinker International Inc. reveal several trends over the specified periods. The Days of Inventory on Hand (DOH) demonstrate a consistent decline, decreasing from 10.49 days in 2021 to 8.51 days in 2024. This indicates an improvement in inventory management efficiency, with the company holding inventory for progressively shorter periods, thereby potentially reducing carrying costs and mitigating inventory obsolescence risks.

Similarly, the Days of Sales Outstanding (DSO) show a downward trend, falling from 9.64 days in 2021 to 5.01 days in 2024. This suggests enhanced receivables collection efficiency, enabling the company to convert its receivables into cash more swiftly. The declining DSO indicates improvements in accounts receivable processes or changes in customer payment behavior that favor faster cash inflows.

Conversely, the Number of Days of Payables exhibits a weakening trend, decreasing from 16.44 days in 2021 to 12.63 days in 2023, before rising again to 15.48 days in 2024. The reduction over the initial years suggests an improvement in the company's ability to pay its suppliers more promptly, which could reflect stronger liquidity or strategic payment practices. The subsequent increase in payables days may indicate a deliberate extension of payment periods to optimize cash flow, though it also warrants consideration of supplier relationships and credit terms.

Overall, the activity ratios indicate a consistent movement toward greater operational efficiency, marked by shorter inventory and receivables periods. Adjustments in payables days reflect a nuanced approach to managing working capital. The data until 2024 suggest that Brinker International Inc. is actively managing its working capital to enhance liquidity and operational responsiveness. However, the absence of data for 2025 limits the assessment of the most recent trends and strategic shifts.

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Long-term

The long-term activity ratios of Brinker International Inc., specifically fixed asset turnover and total asset turnover, demonstrate notable trends over the periods from June 30, 2021, to June 30, 2024.

The fixed asset turnover ratio exhibits significant variability over the observed period. Starting at 1.87 in 2021, it experiences a sharp increase to 4.66 in 2022 and further to 5.11 in 2023, indicating an improved utilization of fixed assets in generating sales during these years. However, this upward trend reverses in 2024, with the ratio declining to 2.24, suggesting a decrease in fixed asset efficiency or possible changes in asset base or operational strategy. The absence of data for 2025 precludes further analysis for that year.

In contrast, the total asset turnover ratio shows a steady incremental trend over the same timeframe. Beginning at 1.47 in 2021, it rises gradually to 1.53 in 2022, 1.66 in 2023, and reaches 1.70 in 2024. The continued upward movement across these years reflects an increasingly efficient use of total assets in generating sales, possibly due to improved operational performance or asset management strategies.

Overall, these ratios suggest that Brinker International Inc. experienced a period of rapid fixed asset efficiency gains between 2021 and 2023, with a notable decline in fixed asset utilization in 2024. Conversely, the continuing improvement in total asset turnover indicates a broadening efficiency in asset utilization at the total asset level during the same period.