The Wendy’s Co (WEN)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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 30, 2020 Jun 30, 2020 Mar 31, 2020
Current ratio 1.85 2.10 2.17 2.04 2.19 2.29 2.48 2.51 2.73 2.62 2.62 2.65 1.39 2.07 2.25 1.62 1.66 1.69 1.42 1.37
Quick ratio 1.13 2.06 1.44 0.45 1.54 0.70 0.82 1.69 1.92 1.75 1.76 1.82 0.58 1.40 1.64 0.91 0.85 0.99 0.77 0.68
Cash ratio 1.13 2.06 1.44 0.45 1.54 0.70 0.82 1.69 1.92 1.75 1.76 1.82 0.58 1.40 1.64 0.91 0.85 0.99 0.77 0.68

Based on the provided data, The Wendy's Co's liquidity ratios have shown some fluctuations over the years.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. The trend for The Wendy's Co's current ratio has been generally increasing, from 1.37 in March 2020 to 1.85 in December 2024. The current ratio peaked at 2.73 in December 2022, indicating a strong ability to meet short-term obligations, although it declined slightly in the following periods.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. The Wendy's Co's quick ratio fluctuated over the years, with values ranging from 0.45 in March 2024 to 2.06 in September 2024. This ratio was below 1 for most periods, indicating that the company may have had difficulties meeting its short-term obligations without relying on inventory.

3. Cash Ratio: The cash ratio is the most conservative liquidity ratio as it only considers cash and cash equivalents to cover short-term liabilities. The Wendy's Co's cash ratio displayed similar trends to the quick ratio, with values ranging from 0.45 in March 2024 to 2.06 in September 2024. This indicates that the company had varying levels of cash available to cover its short-term obligations.

Overall, while The Wendy's Co's current ratio improved over the years, its quick and cash ratios showed more volatility, suggesting some fluctuations in the company's ability to meet its short-term obligations without relying on inventory and other current assets.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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 30, 2020 Jun 30, 2020 Mar 31, 2020
Cash conversion cycle days 1.64 1.43 1.51 1.46 1.64 1.72 1.62 1.60 1.75 1.67 1.75 1.72 1.80 1.29 1.31 1.51 1.51 1.48 1.43 1.46

The cash conversion cycle of The Wendy’s Co has shown some fluctuations over the analyzed period. The company's cash conversion cycle measures the time it takes for the company to convert its investments in inventory and other resources back into cash.

From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged between 1.29 days and 1.80 days. A lower cash conversion cycle indicates that the company is able to more quickly convert its resources into cash, which is typically viewed as favorable as it reflects efficient operations.

The company experienced a decrease in its cash conversion cycle from 1.46 days on March 31, 2020, to 1.31 days on June 30, 2021, indicating improved efficiency in managing its working capital during that period. However, the cycle increased to 1.80 days by December 31, 2021, before fluctuating within the range of 1.43 to 1.75 days through December 31, 2024.

Overall, The Wendy’s Co maintained a relatively stable cash conversion cycle, which suggests a consistent ability to manage its working capital efficiently and generate cash from its operations. A more detailed analysis would be necessary to determine the specific drivers behind the fluctuations and to assess the company's effectiveness in managing its cash flows and inventory levels.