Sonic Automotive Inc (SAH)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 7.03 | 8.84 | 11.25 | 9.40 | 7.80 |
| Receivables turnover | 28.70 | 26.96 | 30.07 | 30.78 | 26.17 |
| Payables turnover | 80.02 | 93.12 | 98.90 | 88.98 | 92.61 |
| Working capital turnover | 57.44 | 62.59 | 38.53 | 64.16 | 190.01 |
Inventory Turnover Ratio:
Sonic Automotive Inc has shown an improving trend in its inventory turnover ratio over the years. The company's ability to turn its inventory into sales has increased from 7.80 in 2020 to 7.03 in 2024, reaching a peak of 11.25 in 2022. This indicates that the company is managing its inventory efficiently, with a higher turnover rate leading to fewer obsolete or stagnant inventory items.
Receivables Turnover Ratio:
The receivables turnover ratio for Sonic Automotive Inc has remained relatively stable over the years, fluctuating between 26.17 in 2020 and 30.78 in 2021, before settling around 28.70 in 2024. This suggests that the company is collecting its accounts receivable in a timely manner, with a consistent rate of turnover indicating efficient credit management practices.
Payables Turnover Ratio:
The payables turnover ratio for Sonic Automotive Inc has shown a declining trend from 92.61 in 2020 to 80.02 in 2024. A decreasing payables turnover ratio may indicate that the company is taking longer to pay its creditors, potentially signaling liquidity concerns or strained supplier relationships. However, it is essential to assess this ratio in conjunction with other liquidity indicators for a more comprehensive analysis.
Working Capital Turnover Ratio:
Sonic Automotive Inc's working capital turnover ratio has exhibited significant fluctuations over the years, ranging from 190.01 in 2020 to 38.53 in 2022, before stabilizing around 57.44 in 2024. This ratio reflects how efficiently the company is utilizing its working capital to generate revenue. The decreasing trend suggests that the company may be becoming less efficient in using its current assets to support sales growth.
In conclusion, while Sonic Automotive Inc has exhibited strength in inventory and receivables management, there are potential areas of concern in payables turnover and working capital turnover ratios that warrant further investigation to assess the overall efficiency and financial health of the company.
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 | 51.92 | 41.30 | 32.45 | 38.81 | 46.77 |
| Days of sales outstanding (DSO) | days | 12.72 | 13.54 | 12.14 | 11.86 | 13.95 |
| Number of days of payables | days | 4.56 | 3.92 | 3.69 | 4.10 | 3.94 |
Sonic Automotive Inc's activity ratios indicate efficiency in managing its inventory, sales, and payables over the period from December 31, 2020, to December 31, 2024.
1. Days of Inventory on Hand (DOH):
- The company had 46.77 days of inventory on hand in December 2020, which decreased to 38.81 days by December 2021, indicating improved inventory turnover.
- Further improvement was seen in December 2022 with only 32.45 days of inventory on hand, but there was a slight increase to 41.30 days by December 2023.
- However, by December 2024, the DOH increased significantly to 51.92 days, suggesting a potential slowdown in inventory turnover.
2. Days of Sales Outstanding (DSO):
- Sonic Automotive reduced its DSO from 13.95 days in December 2020 to 11.86 days by December 2021, showing efficient collection of receivables.
- The DSO slightly increased to 12.14 days in December 2022 and then to 13.54 days by December 2023 but decreased to 12.72 days by December 2024, indicating effective management of accounts receivable.
3. Number of Days of Payables:
- The company's payables were managed efficiently, with a gradual increase in the number of days of payables from 3.94 days in December 2020 to 4.56 days by December 2024.
- The consistency in managing payables reflects a balanced approach to working capital management and supplier relationships.
Overall, Sonic Automotive Inc's activity ratios show a mix of improvements and stability in inventory turnover, receivables collection, and payables management, which are vital for operational efficiency and cash flow management. Continuing to monitor and optimize these ratios will be crucial for sustaining the company's financial health and performance.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 8.86 | 8.89 | 8.90 | 8.46 | 8.68 |
| Total asset turnover | 2.41 | 2.65 | 2.79 | 2.48 | 2.60 |
Sonic Automotive Inc's fixed asset turnover has shown consistency over the past five years, with values ranging from 8.46 to 8.90. This indicates that the company generates approximately $8.46 to $8.90 in revenue for every dollar invested in fixed assets. The relatively stable trend suggests efficient utilization of fixed assets in generating sales.
In contrast, the total asset turnover ratio has displayed more variability, ranging from 2.41 to 2.79. This metric reflects the company's ability to generate revenue from its total assets. While the ratio peaked in 2022 at 2.79, it slightly declined in 2024 to 2.41. Despite the fluctuation, the ratios generally indicate that Sonic Automotive Inc efficiently generates sales in relation to its total assets.
Overall, both fixed asset turnover and total asset turnover ratios suggest that Sonic Automotive Inc effectively manages its assets to generate revenue, with a strong emphasis on the efficient use of fixed assets.