Shake Shack Inc (SHAK)

Activity ratios

Short-term

Turnover ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 23, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Inventory turnover 103.02 98.47 93.23 95.90 97.21 95.90 93.68 92.04 83.84 86.53 78.05 91.16 83.45 115.07 139.33 186.91 185.50 219.54 215.14 207.73
Receivables turnover 64.59 74.79 69.11 67.04 64.67 73.16 69.37 66.73 53.94 61.16 53.72 60.32 54.90 66.44 65.27 88.35 59.62 37.58 47.48 82.17
Payables turnover 24.99 21.35 25.63 26.33 19.93 22.27 22.56 25.97 16.18 17.10 10.57 10.25 10.26 12.27 15.76 24.93 28.81 24.66 95.09 26.69
Working capital turnover 6.39 6.07 5.52 5.08 4.57 3.88 3.26 3.01 2.56 2.30 2.00 1.68 5.56 5.12 5.04 47.89 — 163.53 82.60 55.25

Shake Shack Inc's activity ratios provide insights into the efficiency of the company's management of its assets, receivables, payables, and working capital.

1. Inventory turnover: The company's inventory turnover has been consistent and high, indicating that Shake Shack is effectively managing its inventory by quickly selling and replenishing it. A higher inventory turnover ratio suggests efficient inventory management and a lower risk of obsolete inventory.

2. Receivables turnover: Shake Shack's receivables turnover ratio shows the number of times the company collects its accounts receivable during a period. The decreasing trend in recent quarters may indicate a slowdown in the collection of receivables, which could impact the company's cash flow.

3. Payables turnover: The payables turnover ratio reflects how quickly Shake Shack pays its suppliers. The increasing trend in the ratio indicates that the company is taking longer to pay its payables, which could signify better cash flow management but may also result in strained supplier relationships.

4. Working capital turnover: This ratio shows how efficiently Shake Shack is utilizing its working capital to generate sales. The declining trend in recent quarters suggests that the company's efficiency in converting working capital into revenue has decreased, potentially highlighting issues with operational efficiency or liquidity management.

Overall, Shake Shack's activity ratios indicate a need for closer monitoring of receivables collection and payables management to maintain operational efficiency and cash flow stability.

Average number of days

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 23, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Days of inventory on hand (DOH) days 3.54 3.71 3.92 3.81 3.75 3.81 3.90 3.97 4.35 4.22 4.68 4.00 4.37 3.17 2.62 1.95 1.97 1.66 1.70 1.76
Days of sales outstanding (DSO) days 5.65 4.88 5.28 5.44 5.64 4.99 5.26 5.47 6.77 5.97 6.79 6.05 6.65 5.49 5.59 4.13 6.12 9.71 7.69 4.44
Number of days of payables days 14.60 17.09 14.24 13.86 18.31 16.39 16.18 14.05 22.55 21.35 34.54 35.60 35.57 29.76 23.15 14.64 12.67 14.80 3.84 13.68

Shake Shack Inc's activity ratios provide insights into how efficiently the company manages its inventory, collects its receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH): The trend in Shake Shack's DOH shows that the company has been able to effectively manage its inventory levels over time. The decreasing trend from 4.37 days in Dec 2020 to 3.54 days in Dec 2023 indicates that the company is improving its inventory turnover efficiency, possibly by optimizing its supply chain and forecasting methods.

2. Days of Sales Outstanding (DSO): Shake Shack's DSO has fluctuated over the periods, suggesting variations in the company's ability to collect receivables from customers. The decreasing trend from 6.65 days in Dec 2020 to 5.65 days in Dec 2023 is a positive sign that the company is collecting payments more quickly, improving its cash flow efficiency.

3. Number of Days of Payables: The trend in the number of days of payables shows that Shake Shack has been consistently managing its payables effectively, with fluctuations based on payment terms and supplier relationships. The decreasing trend from 35.57 days in Dec 2020 to 14.60 days in Dec 2023 indicates the company is paying its suppliers more promptly, which could help maintain good relationships and potentially negotiate better terms in the future.

Overall, Shake Shack's activity ratios highlight the company's efforts to enhance operational efficiency through effective inventory management, timely collection of receivables, and efficient management of payables.

Long-term

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 23, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Fixed asset turnover 2.05 1.98 1.98 1.98 1.92 1.95 2.01 1.97 1.89 1.87 1.76 1.53 1.54 1.57 1.68 1.83 1.89 1.86 2.27 2.75
Total asset turnover 0.68 0.66 0.64 0.62 0.59 0.57 0.56 0.54 0.51 0.48 0.44 0.38 0.45 0.45 0.48 0.58 0.61 0.59 0.72 0.86

Shake Shack Inc's long-term activity ratios indicate its efficiency in utilizing its assets to generate sales. The fixed asset turnover ratio has been relatively stable over the periods, ranging from 1.53 to 2.75. This suggests that Shake Shack is effectively using its fixed assets to generate revenue, with a higher ratio indicating better efficiency in utilizing property, plant, and equipment.

In comparison, the total asset turnover ratio has shown a decreasing trend, ranging from 0.38 to 0.86. This indicates that Shake Shack's overall efficiency in generating sales from all its assets has been declining over time. A lower total asset turnover ratio suggests that the company may be facing challenges in efficiently utilizing all its assets to generate revenue, including both fixed and current assets.

Overall, while Shake Shack's efficiency in utilizing fixed assets to generate sales has been relatively stable, there may be opportunities for the company to improve its overall asset efficiency to drive revenue growth.