The Wendy’s Co (WEN)

Short-term

Turnover ratios

The Wendy’s Co's inventory turnover has shown a decreasing trend over the years, indicating that the company is efficiently managing its inventory, with a peak turnover of 235.07 in 2020 and a decrease to 192.84 in 2022, before bouncing back to 223.08 in 2024. This suggests that the company is selling its inventory more quickly than in previous years.

The receivables turnover ratio was not provided for any of the years, making it challenging to assess the effectiveness of the company in collecting on its credit sales within a given period.

Similarly, payables turnover data was not available to determine how quickly the company pays its suppliers, impacting the analysis of the efficiency of the company's accounts payable management.

The working capital turnover ratio fluctuated over the years, with a substantial increase from 6.32 in 2020 to 11.43 in 2021, indicating that the company generated more revenue for every dollar of working capital invested. However, there was a decline in 2022 to 3.13, followed by an increase to 6.64 in 2024, reflecting changes in the company's operational efficiency in utilizing its working capital to generate sales.

Overall, while the inventory turnover ratios suggest efficient management of inventory, the absence of receivables and payables turnover ratios limits the comprehensive assessment of The Wendy’s Co's overall activity ratios.

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Average number of days

The Days of Inventory on Hand (DOH) measures how efficiently a company manages its inventory. It indicates the number of days it takes for a company to sell its entire inventory.

For The Wendy's Co, the trend in DOH over the years from 2020 to 2024 shows a slight fluctuation but generally remains low, ranging from 1.55 to 1.89 days. A lower DOH implies that Wendy's is effectively turning over its inventory quickly, which is desirable as it reduces holding costs and minimizes the risk of obsolete inventory.

The Days of Sales Outstanding (DSO) measures how efficiently a company collects its accounts receivable. In this case, the data provided shows "— days" for all years, which may indicate that Wendy's operates on a cash basis or has very quick collection terms with customers.

The Number of Days of Payables indicates how long a company takes to pay its suppliers. Similarly, the data provided shows "— days" for all years, which could suggest that Wendy's pays its suppliers promptly or has short payment terms in place.

In conclusion, based on the activity ratios provided, The Wendy's Co appears to manage its inventory efficiently (low DOH), potentially collects receivables promptly (low DSO), and may also have effective payables management practices.

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Long-term

The analysis of The Wendy’s Co long-term activity ratios provides insights into the efficiency of the company in utilizing its assets to generate revenue. The Fixed Asset Turnover ratio measures how efficiently the company is generating sales from its investments in fixed assets.

In 2020, the Fixed Asset Turnover was 1.89, indicating that for each dollar invested in fixed assets, the company generated $1.89 in sales. However, this ratio decreased to 0.97 in 2021, which suggests a decrease in efficiency in utilizing fixed assets to generate revenue.

The ratio improved significantly in 2022 to 2.34, indicating a more efficient use of fixed assets to generate sales. The data for 2023 and 2024 is not available, but it is worth noting that maintaining or increasing this ratio over time is generally considered favorable.

Total Asset Turnover, on the other hand, measures the company's ability to generate sales from its total assets. The trend shows a gradual increase from 0.34 in 2020 to 0.45 in 2024. This indicates that the company has been able to generate more revenue relative to its total assets over the years, a positive sign of efficiency in asset utilization.

Overall, the analysis of The Wendy’s Co long-term activity ratios suggests improvements in the utilization of fixed assets to generate sales, as well as an increasing efficiency in generating revenue from total assets over the years.