Brinker International Inc (EAT)

Short-term

Turnover ratios

The activity ratios of Brinker International Inc. over the specified period reflect notable trends and operational efficiencies in inventory management, receivables collection, and payment practices.

Inventory Turnover:
The inventory turnover ratio demonstrates a consistent upward trajectory, indicating the company's increasing efficiency in managing its inventory levels. Starting from a very high value of approximately 63.13 times as of December 2020 (which is exceptionally elevated and may suggest a special circumstance or data anomaly), the ratio declined significantly by the end of 2020 to around 23.85. Subsequently, the ratio generally trended upward from early 2021, reaching approximately 45.66 by the end of 2024. This steady increase suggests improved inventory management and faster inventory turnover, likely reflecting better supply chain efficiency or product mix adjustments. The ratio's volatility prior to 2022 could reflect operational adjustments or external factors, but the overall trend indicates increased inventory efficiency over time.

Receivables Turnover:
The receivables turnover ratios reveal a pattern of increasing efficiency in collecting accounts receivable. After starting at around 25.22 times in December 2020, the ratio fluctuated but generally increased, reaching notably high levels such as 82.32 times in September 2023, and further climbing to approximately 89.22 times by March 2024. Such high receivables turnover indicates that the company is collecting its receivables rapidly, minimizing the period outstanding and improving cash flow. The significant spikes suggest periods of enhanced collection efficiency or changes in credit policy, particularly visible through the impressive ratio in the first quarter of 2024.

Payables Turnover:
The payables turnover ratio exhibits moderate fluctuations. It generally remained within a range of approximately 16.64 to 28.90 times, with periods of increase aligning with tighter vendor payment cycles or strategic management of trade payables. The ratio shows a decline to its lowest value of 18.74 times in the first quarter of 2025, suggesting an extension in the time taken to pay suppliers compared to earlier periods. The variations in this ratio reflect ongoing adjustments in payment policies and liquidity management practices.

Working Capital Turnover:
Data for working capital turnover are unavailable across the analyzed period, limiting its interpretative value. The persistent absence of this ratio suggests that either relevant data were not reported or the metric was not calculated, preventing analysis of the company's efficiency in utilizing its working capital.

Overall:
Brinker International’s activity ratios indicate an improving operational efficiency, particularly in inventory and receivables management. The increasing inventory turnover ratio suggests enhanced control over inventory levels, while the rising receivables turnover ratios imply more effective credit and collection policies. The payables turnover shows some strategic variation but generally maintains stable supplier payment practices. These efficiency trends collectively point toward a focus on optimizing asset utilization and cash flow management within the company's operational framework.

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Average number of days

Brinker International Inc’s activity ratios over the given periods provide insights into its operational efficiency and working capital management.

Days of Inventory on Hand (DOH):
The DOH ratio indicates the average number of days inventory is held before being sold. From December 2020 to September 2024, there is a noticeable decreasing trend, with inventory days declining from approximately 15.30 days in December 2020 to around 8.88 days at the end of 2023. This reduction suggests an improvement in inventory management, likely reflecting more efficient inventory turnover and possibly a shift toward leaner inventory practices. The stability around the 8.78 to 8.88-day mark during 2023 and early 2024 indicates consistency in inventory handling, though a slight uptick in March 2025 to 9.48 days suggests a modest increase in inventory holding periods.

Days of Sales Outstanding (DSO):
The DSO ratio measures the average number of days customer receivables remain outstanding before collection. A downward trend from approximately 14.47 days in December 2020 to as low as 4.09 days in March 2024 demonstrates increasingly efficient receivables collection. The DSO remained relatively stable and low during late 2023 and mid-2024, indicating effective credit and collection policies. The slight increase back to about 6.84 days at the end of 2023 and 4.28 days in March 2025 signifies maintained operational efficiencies in receivable management.

Number of Days of Payables:
This ratio reflects the average period that Brinker International takes to settle its payables. The data shows variation over the periods, with an overall decreasing trend from around 21.94 days in December 2020 to approximately 12.63 days by June 2023. The decline suggests a strategic shortening of payment cycles, possibly to optimize cash flows or respond to supplier negotiations. The ratio remains relatively stable around 14 days in late 2023 and early 2024, indicating consistent payment policies during this period. The notable increase to approximately 19.48 days in March 2025 could imply extended payment terms or shifts in supplier relationships.

Summary:
The activity ratios suggest that Brinker International has progressively improved its operational efficiency over the analyzed period. The decreasing inventory days and receivables days imply faster turnover and collection processes, reducing working capital requirements and enhancing liquidity. The reductions in payables days and subsequent increases highlight a strategic balancing act in managing payment terms, possibly aligning with broader cash management initiatives. Overall, these trends depict a company actively optimizing its operations, aligning inventory, receivables, and payables management toward improved financial performance and working capital efficiency.

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Long-term

The analysis of Brinker International Inc.'s long-term activity ratios, specifically the Fixed Asset Turnover and Total Asset Turnover, reveals notable trends over the specified period.

Fixed Asset Turnover:
This ratio, which measures how efficiently the company utilizes its fixed assets to generate sales, exhibits a fluctuating pattern throughout the observed timeframe. Starting from 3.66 in December 2020, the ratio increased steadily, reaching a peak of 4.66 in June 2022. During this phase, the company demonstrated improved capital efficiency in its fixed assets. However, a significant decline occurs thereafter, with the ratio decreasing sharply to 2.17 by September 2023. This steep drop suggests a decline in fixed asset utilization efficiency, potentially due to increased capital investments, underutilized assets, or changes in operational strategies. The ratio further registers at 2.44 in December 2024 and then shows a modest recovery to 2.55 in March 2025. The period from September 2023 onwards indicates a notable deterioration in fixed asset efficiency, contrasting with prior improvements.

Total Asset Turnover:
This ratio, reflecting the overall efficiency in using total assets to generate sales, demonstrates a consistent upward trajectory. Beginning at 1.19 in December 2020, it gradually increases to 2.01 by June 2025, indicating a steady enhancement in asset utilization efficiency. Notably, the ratio advances progressively over the period, with minor fluctuations, suggesting that the company's overall asset management has improved, enabling more sales to be generated per unit of total assets. This positive trend may point to better operational efficiencies or effective redeployment of assets.

Summary:
In summary, while Brinker International Inc. has generally experienced improvements in total asset utilization over the period, as evidenced by the rising Total Asset Turnover, its fixed asset utilization has faced volatility, especially post-2022, with a marked decline in recent years. The divergence suggests a strategic shift or operational challenges related to fixed asset management, warranting further investigation into asset deployment and operational efficiencies. Nevertheless, the overall trend in total asset efficiency remains positive, aligning with broader improvements in asset management performance.