Sonos Inc (SONO)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company is managing its assets and resources. Let's analyze the activity ratios of Sonos Inc based on the provided data:

1. Inventory Turnover:
- Sonos Inc's inventory turnover has been varying over the past five years, with the highest turnover in 2021 and 2020. This indicates that the company is generally able to sell its inventory relatively quickly. A higher inventory turnover ratio suggests efficient inventory management.

2. Receivables Turnover:
- Sonos Inc's receivables turnover has been increasing steadily, reaching its peak in 2024. This implies that the company is collecting its accounts receivables more quickly over time. A higher receivables turnover ratio reflects effective credit and collection policies.

3. Payables Turnover:
- The payables turnover of Sonos Inc has been fluctuating, with the highest turnover in 2023. A lower payables turnover ratio may indicate that the company is taking longer to pay its suppliers. However, variations in this ratio can also be influenced by industry norms and payment terms negotiated with suppliers.

4. Working Capital Turnover:
- Sonos Inc's working capital turnover has been on an upward trend, indicating an improved efficiency in utilizing working capital to generate sales. A higher working capital turnover ratio suggests that the company is effectively managing its working capital to support its operational activities.

Overall, analyzing activity ratios such as inventory turnover, receivables turnover, payables turnover, and working capital turnover provides valuable insights into Sonos Inc's operational efficiency and management of resources over the past five years.

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Average number of days

Sonos Inc's activity ratios, which include Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables, provide insights into the efficiency of the company's operations and management of working capital.

- Days of Inventory on Hand (DOH) measures how many days it takes for the company to sell its inventory. A lower DOH is generally preferable as it indicates faster inventory turnover. Over the past five years, Sonos has shown a decreasing trend in DOH, from 117.71 days in 2022 to 66.68 days in 2024. This suggests that the company has been managing its inventory more efficiently, possibly through better demand forecasting or inventory control.

- Days of Sales Outstanding (DSO) calculates the average number of days it takes for the company to collect payments from its customers. A lower DSO indicates faster cash conversion and efficient credit management. Sonos has also seen an improving trend in DSO over the years, with a decrease from 21.43 days in 2021 to 10.68 days in 2024. This indicates that Sonos has been able to collect payments from customers more quickly, possibly through tighter credit policies or improved collection processes.

- Number of Days of Payables measures how long it takes for the company to pay its suppliers. A higher number of days of payables suggests that the company is taking longer to settle its payables, which can help improve cash flow. Sonos has shown fluctuations in this metric over the years, with the number of days of payables ranging from 49.57 days in 2023 to 87.00 days in 2022. The current number of days of payables in 2024 is 56.05 days.

In conclusion, Sonos Inc has demonstrated improvements in managing its inventory turnover and collection processes, as evidenced by the decreasing trends in DOH and DSO. Despite some fluctuations, the company has maintained a reasonable number of days of payables, which can help in optimizing its working capital management.

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Long-term

The fixed asset turnover ratio for Sonos Inc has shown a declining trend over the past five years, from 21.79 in 2020 to 14.89 in 2024. This indicates that the company's ability to generate sales from its fixed assets has weakened over time.

On the other hand, the total asset turnover ratio has remained relatively stable, hovering around 1.5 to 1.7 range during the same period. This suggests that Sonos Inc has been able to efficiently utilize its total assets to generate sales, maintaining a consistent level of productivity in this aspect.

Overall, while the fixed asset turnover ratio has displayed a downward trajectory, the total asset turnover ratio has remained steady, reflecting Sonos Inc's ability to efficiently utilize its total assets in generating revenue despite potential inefficiencies in utilizing its fixed assets.