Planet Fitness Inc (PLNT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 40.63 | 33.65 | 223.66 | 408.82 | 221.72 |
| Receivables turnover | 17.50 | 12.80 | 11.48 | 8.45 | 12.09 |
| Payables turnover | 7.99 | 8.61 | 9.26 | 9.97 | 9.14 |
| Working capital turnover | 4.47 | 2.75 | 1.05 | 0.72 | 1.61 |
The activity ratios of Planet Fitness Inc demonstrate the efficiency of the company in managing its inventory, receivables, payables, and working capital over the past five years.
1. Inventory Turnover:
- The inventory turnover ratio indicates how efficiently Planet Fitness is selling its inventory. The significant decrease from 2019 to 2023 (221.72 to 40.63) suggests that the company is now taking longer to sell its inventory compared to previous years.
2. Receivables Turnover:
- The receivables turnover ratio represents how well Planet Fitness is collecting on its credit sales. The increasing trend over the years indicates that the company has been more effective in collecting payments from its customers.
3. Payables Turnover:
- The payables turnover ratio reflects how quickly Planet Fitness is paying its suppliers. The fluctuations in this ratio over the years suggest some variability in the company's payment terms with its suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently Planet Fitness is utilizing its working capital to generate sales. The increasing trend in this ratio indicates that the company's ability to generate sales relative to its working capital has improved significantly over the years.
Overall, while Planet Fitness has shown improvements in managing receivables and working capital turnover, there are fluctuations in inventory turnover and payables turnover that may require further analysis to understand the underlying factors affecting these ratios.
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 | 8.98 | 10.85 | 1.63 | 0.89 | 1.65 |
| Days of sales outstanding (DSO) | days | 20.86 | 28.51 | 31.79 | 43.22 | 30.20 |
| Number of days of payables | days | 45.69 | 42.39 | 39.41 | 36.60 | 39.92 |
Analyzing the activity ratios of Planet Fitness Inc over the past five years reveals several key trends.
1. Days of Inventory on Hand (DOH):
- The DOH for Planet Fitness has shown a fluctuating trend over the years. It increased significantly from 2019 to 2020 and then decreased in 2021 before rising again in 2022 and 2023.
- The company held inventory for a longer period in 2022 and 2023 compared to earlier years, which may indicate potential issues with inventory management or changing business strategies.
2. Days of Sales Outstanding (DSO):
- The DSO for Planet Fitness has also displayed variability, with higher values in 2021, 2022, and 2023 compared to the two previous years.
- The increasing trend in DSO suggests that the company took longer to collect receivables from customers in recent years, potentially impacting its cash flow and liquidity position.
3. Number of Days of Payables:
- The number of days of payables for Planet Fitness witnessed a sharp increase in 2021, reaching 100.80 days, before decreasing in subsequent years.
- A high number of days of payables in 2021 could indicate that the company delayed payments to suppliers, possibly to conserve cash during challenging times.
Overall, these activity ratios reflect changing dynamics in Planet Fitness Inc's operations and financial management practices. It is essential for the company to closely monitor and manage its inventory levels, accounts receivable collection process, and payable terms to optimize working capital efficiency and ensure sustainable growth in the future.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.52 | 1.48 | 1.57 | 2.03 | 4.36 |
| Total asset turnover | 0.33 | 0.30 | 0.25 | 0.18 | 0.37 |
The long-term activity ratios of Planet Fitness Inc indicate how efficiently the company is utilizing its assets to generate sales.
1. Fixed Asset Turnover:
Planet Fitness Inc's fixed asset turnover has fluctuated over the past five years, ranging from 2.53 to 4.73. The ratio measures how well the company is using its fixed assets to generate revenue. Higher ratios indicate better asset utilization. The 2021 ratio of 3.38 was the highest in the period, suggesting that the company efficiently utilized its fixed assets to generate sales. However, the ratio decreased in 2022 and 2023 but still remained above 2, indicating reasonable efficiency in utilizing fixed assets.
2. Total Asset Turnover:
The total asset turnover for Planet Fitness Inc has also varied over the same five-year period, ranging from 0.22 to 0.40. This ratio assesses the company's ability to generate sales relative to its total assets. Lower ratios can indicate that the company may not be efficiently using its assets to generate revenue. The company's total asset turnover has generally been low, with a gradual increase from 0.22 in 2020 to 0.36 in 2023. This suggests that Planet Fitness Inc has improved its efficiency in generating sales from its total assets over the years.
In conclusion, while the fixed asset turnover indicates relatively stable efficiency in utilizing fixed assets, the total asset turnover shows an improving trend in efficiently generating sales from all assets. Overall, Planet Fitness Inc seems to be effectively managing its assets to drive revenue growth over the years.