Sonic Automotive Inc (SAH)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 8.84 | 11.25 | 9.40 | 7.80 | 5.89 |
| Receivables turnover | 26.96 | 30.07 | 30.78 | 26.17 | 24.16 |
| Payables turnover | 93.12 | 98.90 | 88.98 | 92.61 | 66.07 |
| Working capital turnover | 62.59 | 38.53 | 64.16 | 190.01 | — |
Analyzing Sonic Automotive, Inc.'s activity ratios reveals important insights into the efficiency of the company's operations over the years.
1. Inventory Turnover: This ratio indicates how many times a company's inventory is sold and replaced over a certain period. Sonic Automotive's inventory turnover has shown an increasing trend from 5.89 in 2019 to 7.68 in 2023, indicating that the company is managing its inventory more efficiently.
2. Receivables Turnover: This ratio measures how quickly a company collects cash from its credit sales. Sonic Automotive's receivables turnover has been relatively stable over the years, ranging from 24.16 in 2019 to 30.91 in 2021, suggesting consistent collection efforts.
3. Payables Turnover: The payables turnover ratio reflects how quickly a company pays off its suppliers. Sonic Automotive's payables turnover has shown fluctuations but generally remained above 66 for the past five years, indicating a relatively efficient payment cycle with suppliers.
4. Working Capital Turnover: This ratio measures how effectively a company utilizes its working capital to generate sales revenue. Sonic Automotive's working capital turnover has fluctuated significantly, ranging from 38.78 in 2022 to 190.91 in 2020, implying varying levels of efficiency in utilizing working capital over the years.
Overall, Sonic Automotive's activity ratios highlight improvements in inventory management efficiency and relatively stable performance in accounts receivable and payable management. However, the fluctuating trend in working capital turnover suggests the need for closer monitoring of working capital utilization to optimize sales generation.
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 | 41.30 | 32.45 | 38.81 | 46.77 | 62.02 |
| Days of sales outstanding (DSO) | days | 13.54 | 12.14 | 11.86 | 13.95 | 15.11 |
| Number of days of payables | days | 3.92 | 3.69 | 4.10 | 3.94 | 5.52 |
The activity ratios of Sonic Automotive, Inc. indicate how efficiently the company is managing its inventory, receivables, and payables over the past five years.
1. Days of inventory on hand (DOH) have shown a fluctuating trend, ranging from a high of 62.02 days in 2019 to a low of 38.01 days in 2022. A lower DOH implies that the company is efficiently managing its inventory levels, which can lead to lower holding costs and better cash flow.
2. Days of sales outstanding (DSO) have generally decreased from 15.11 days in 2019 to 12.05 days in 2022 before slightly increasing in 2023. A lower DSO indicates that the company is collecting payments from customers more quickly, which can improve cash flow and reduce the risk of bad debts.
3. Number of days of payables has remained relatively stable over the years, with slight fluctuations. The decrease seen in the number of days of payables from 5.52 days in 2019 to 4.32 days in 2022 and the subsequent increase in 2023 suggests the company may be managing its payables more efficiently.
Overall, Sonic Automotive, Inc. has shown improvements in managing its inventory and receivables efficiently over the years, which can positively impact its cash flow and working capital management. However, the stability in the number of days of payables indicates the company has maintained a consistent approach to managing its payables.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 8.89 | 8.90 | 8.46 | 8.68 | 9.53 |
| Total asset turnover | 2.65 | 2.79 | 2.48 | 2.60 | 2.57 |
Sonic Automotive, Inc.'s long-term activity ratios exhibit trends in its efficiency in utilizing fixed assets and total assets over the past five years. The fixed asset turnover ratio remained relatively stable, averaging around 8.74 over the period. This indicates that the company generated approximately $8.74 in sales for every dollar invested in fixed assets.
On the other hand, the total asset turnover ratio fluctuated slightly, with an average of 2.63. This ratio suggests that Sonic Automotive generated $2.63 in sales for every dollar of total assets. Overall, the company has shown efficient utilization of both fixed and total assets, with a consistent ability to generate revenue relative to its asset base.
However, it would be important to further analyze the reasons behind the variations in these ratios to understand the driving factors influencing Sonic Automotive's asset turnover efficiency in each period and assess the company's overall operational performance.