The Wendy’s Co (WEN)

Short-term

Turnover ratios

Wendy's Co has shown a consistent improvement in its inventory turnover ratio over the years, indicating that the company is efficiently managing its inventory levels. The inventory turnover ratio has significantly increased from 108.45 in 2022 to 118.76 in 2023, showcasing a positive trend.

The receivables turnover ratio for Wendy's Co has remained relatively stable over the past five years, ranging from 14.55 to 18.00. This indicates that the company is able to collect its accounts receivable in a timely manner.

In terms of payables turnover, Wendy's Co has demonstrated an upward trend with the ratio increasing from 14.86 in 2022 to 29.03 in 2023. This suggests that the company is efficiently managing its accounts payable and is paying its suppliers in a timely manner.

The working capital turnover ratio for Wendy's Co has fluctuated over the years, with a notable decrease in 2023 compared to 2022. This may imply that the company's efficiency in utilizing its working capital has declined slightly in the most recent period.

Overall, Wendy's Co's activity ratios reflect effective management of inventory, receivables, and payables, with some fluctuations in working capital turnover. Continued monitoring of these ratios will be essential for assessing the company's operational efficiency and financial performance.

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Average number of days

Wendy's Co's activity ratios provide insight into the efficiency of the company's operations. Looking at the days of inventory on hand (DOH), we see a downward trend over the years, indicating a more effective management of inventory. In 2023, Wendy's Co was able to turn its inventory into sales in about 3.07 days, which is an improvement from previous years.

The days of sales outstanding (DSO) measure how long it takes for the company to collect its accounts receivable. Wendy's Co has been able to reduce its DSO from 25.09 days in 2019 to 20.36 days in 2023, showing an improvement in the company's ability to collect revenue quickly.

On the other hand, the number of days of payables illustrates how long it takes for the company to pay its suppliers. Wendy's Co has been efficient in managing its payables, with a decrease in days from 13.87 days in 2019 to 12.57 days in 2023. This suggests that the company is effectively managing its cash flow by optimizing its payment terms.

Overall, Wendy's Co's activity ratios indicate improvements in inventory management and collections while maintaining efficient payables practices. These trends reflect positively on the company's operational efficiency and cash flow management strategies.

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Long-term

Wendy's Co's long-term activity ratios indicate how efficiently the company is utilizing its assets to generate sales revenue. The fixed asset turnover has steadily improved over the past five years, increasing from 1.75 in 2019 to 2.45 in 2023. This suggests that Wendy's is generating more sales relative to its investment in fixed assets, such as property, plant, and equipment, which is a positive sign of operational efficiency.

The total asset turnover ratio has also shown an upward trend, growing from 0.34 in 2019 to 0.42 in 2023. This indicates that Wendy's is becoming more efficient in utilizing all its assets, including both fixed and current assets, to generate sales. The improvement in total asset turnover suggests that the company's overall asset management has become more effective over the years.

Overall, the increasing trend in both fixed asset turnover and total asset turnover ratios signifies that Wendy's Co has been improving its asset utilization efficiency, leading to better revenue generation from its assets. This indicates that the company is managing its assets well and operating more efficiently, which can potentially result in increased profitability in the long term.