The Wendy’s Co (WEN)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 2.06 | 2.25 | 2.21 | 1.84 | 1.42 |
| Days of sales outstanding (DSO) | days | 21.24 | 20.28 | 23.00 | 23.13 | 27.98 |
| Number of days of payables | days | 8.41 | 13.88 | 15.36 | 12.07 | 8.30 |
| Cash conversion cycle | days | 14.89 | 8.65 | 9.86 | 12.91 | 21.10 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 2.06 + 21.24 – 8.41
= 14.89
The cash conversion cycle of Wendy's Co has fluctuated over the past five years. In 2023, the cash conversion cycle was 10.86 days, indicating that it took Wendy's approximately 10.86 days to convert its investments in inventory and other resources into cash receipts from customers. This represents an increase from the previous year when the cycle was only 2.88 days, suggesting a slower conversion of resources into cash.
In 2022, the cash conversion cycle was 1.98 days, indicating a very efficient conversion process. However, in 2021, the cycle increased to 7.50 days, signifying a longer period to convert resources into cash compared to the previous year.
The cash conversion cycle peaked in 2019 at 13.60 days, reflecting a significant lag in converting resources into cash receipts. The improvement seen in 2022 might have been an outcome of operational efficiencies or changes in the company's strategies. Overall, fluctuations in the cash conversion cycle over the years suggest varying levels of efficiency in managing cash flow and working capital within Wendy's Co.
Peer comparison
Dec 31, 2023