Planet Fitness Inc (PLNT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 32.07 | 40.63 | 33.65 | 223.66 | 408.82 |
| Receivables turnover | 12.22 | 17.50 | 12.80 | 11.48 | 8.45 |
| Payables turnover | 5.99 | 7.99 | 8.61 | 9.26 | 9.97 |
| Working capital turnover | 3.86 | 4.47 | 2.75 | 1.05 | 0.72 |
The activity ratios of Planet Fitness Inc provide insights into how efficiently the company is managing its assets and liabilities.
1. Inventory Turnover: This ratio measures how many times a company's inventory is sold and replaced over a specific period. Planet Fitness Inc's inventory turnover has decreased over the years, indicating that the company is selling its inventory at a slower rate. The higher the ratio, the more efficient the company is at managing its inventory.
2. Receivables Turnover: The receivables turnover ratio reflects how efficiently a company is collecting payments from its customers. Planet Fitness Inc's receivables turnover has shown an increasing trend, suggesting that the company is collecting payments from its customers more quickly. A higher turnover ratio indicates better efficiency in managing receivables.
3. Payables Turnover: Payables turnover ratio evaluates how efficiently a company is managing its payments to suppliers. Planet Fitness Inc's payables turnover has been decreasing, implying that the company is taking longer to pay its suppliers. A lower turnover ratio can indicate that the company has good relationships with its suppliers but may also signal potential liquidity issues.
4. Working Capital Turnover: This ratio measures how effectively a company is utilizing its working capital to generate sales. Planet Fitness Inc's working capital turnover has exhibited an upward trend, indicating that the company is generating more sales relative to its working capital. A higher turnover ratio suggests that the company is efficiently utilizing its working capital to drive revenue.
Overall, these activity ratios provide valuable insights into Planet Fitness Inc's operational efficiency and effectiveness in managing its resources to support sustainable business growth.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 11.38 | 8.98 | 10.85 | 1.63 | 0.89 |
| Days of sales outstanding (DSO) | days | 29.86 | 20.86 | 28.51 | 31.79 | 43.22 |
| Number of days of payables | days | 60.90 | 45.69 | 42.39 | 39.41 | 36.60 |
Based on the provided data for Planet Fitness Inc, we can analyze the company's activity ratios as follows:
1. Days of Inventory on Hand (DOH):
- The company's DOH has shown volatility over the years, starting at 0.89 days in 2020 and increasing to 11.38 days by the end of 2024. This indicates that Planet Fitness is taking longer to sell its inventory over time, which could be a concern for the company's cash flow and profitability.
2. Days of Sales Outstanding (DSO):
- Planet Fitness has been improving its efficiency in collecting payments from customers, with DSO decreasing from 43.22 days in 2020 to 29.86 days in 2024. A lower DSO is generally positive as it suggests the company is more effective in converting its sales into cash.
3. Number of Days of Payables:
- The number of days of payables has been steadily increasing from 36.60 days in 2020 to 60.90 days in 2024. This indicates that Planet Fitness is taking longer to pay its suppliers over time, which could be beneficial for managing cash flow but may also strain relationships with suppliers if payment terms are extended too far.
In summary, Planet Fitness Inc's activity ratios reveal a mixed performance. While the company has improved in collecting payments from customers, there are concerns regarding the increasing days of inventory on hand and days of payables. Monitoring these metrics will be crucial for assessing the company's operational efficiency and financial health in the future.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.78 | 2.52 | 1.48 | 1.57 | 2.03 |
| Total asset turnover | 0.38 | 0.33 | 0.30 | 0.25 | 0.18 |
The fixed asset turnover ratio for Planet Fitness Inc has shown a decreasing trend over the years, declining from 2.03 in 2020 to 1.48 in 2022, before experiencing an upturn to 2.78 in 2024. This ratio indicates the efficiency of the company in generating revenue from its fixed assets, such as property, plant, and equipment. The increasing trend in fixed asset turnover from 2022 onwards suggests that the company has been utilizing its fixed assets more effectively to generate sales.
On the other hand, the total asset turnover ratio for Planet Fitness Inc has been increasing steadily from 0.18 in 2020 to 0.38 in 2024. This ratio reflects how efficiently the company is using its total assets to generate sales. The rising trend in total asset turnover over the years indicates that the company has been improving its overall asset utilization efficiency and generating more revenue per dollar of assets.
In summary, while the fixed asset turnover ratio fluctuated initially and then improved significantly, the total asset turnover ratio consistently increased over the years. These trends suggest that Planet Fitness Inc has been enhancing its operational efficiency in utilizing both fixed and total assets to drive sales growth and improve overall financial performance.