Wingstop Inc (WING)

Short-term

Turnover ratios

Wingstop Inc's activity ratios reflect its efficiency in managing various aspects of its operations.

1. Inventory Turnover: Wingstop's inventory turnover has been relatively high and consistent over the years, indicating that the company is efficiently managing its inventory levels. The decreasing trend from 2022 to 2021 could suggest that Wingstop has optimized its inventory management processes, leading to fewer inventory turnovers but potentially with higher levels of inventory efficiency.

2. Receivables Turnover: The receivables turnover ratio measures how efficiently Wingstop is collecting payments from customers. The values have been relatively stable over the years, indicating that Wingstop has been consistent in managing its accounts receivable effectively.

3. Payables Turnover: Wingstop's payables turnover ratio has shown fluctuations over the years. The significant increase from 2021 to 2022 suggests that Wingstop improved its payment management practices, possibly negotiating more favorable terms with suppliers or paying off its obligations more efficiently.

4. Working Capital Turnover: Wingstop's working capital turnover has also varied significantly over the years. The high levels of working capital turnover in 2020 and 2019 indicate that Wingstop was effectively utilizing its working capital to generate sales. However, the decrease in 2023 suggests a potential change in the company's working capital management strategy.

Overall, Wingstop's activity ratios demonstrate a level of efficiency in managing its inventory, accounts receivable, and payables. The fluctuations in these ratios indicate changes in the company's operational efficiency and effectiveness over the years.

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Average number of days

Activity ratios provide insights into how efficiently Wingstop Inc is managing its inventory, collecting receivables, and managing payables.

1. Days of Inventory on Hand (DOH):
- Wingstop Inc's DOH has fluctuated over the years but generally remains low, indicating efficient inventory management. In 2023, inventory was held for an average of 1.15 days before being sold, slightly higher than in 2022 but still relatively low compared to previous years.

2. Days of Sales Outstanding (DSO):
- The DSO measures how long it takes for Wingstop Inc to collect payment from its customers. The trend shows a slight increase in 2023 to 9.84 days, compared to the previous year. This may indicate that receivables are taking slightly longer to convert into cash, which could be a concern if the trend continues.

3. Number of Days of Payables:
- The number of days of payables measures how long Wingstop Inc takes to pay its suppliers. The trend indicates that Wingstop Inc is managing its payables efficiently, with a decrease in the number of days of payables in 2023 compared to the previous year. This suggests that Wingstop Inc is able to take advantage of favorable payment terms from suppliers.

Overall, based on the activity ratios, Wingstop Inc appears to be managing its inventory efficiently, while improvements can potentially be made in collecting receivables to speed up cash inflows. Additionally, Wingstop Inc's management of payables is commendable, as the company is efficient in paying its suppliers.

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Long-term

Wingstop Inc's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into how efficiently the company is utilizing its assets to generate revenue over time.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how effectively a company is using its fixed assets to generate sales. A higher ratio indicates better utilization of fixed assets.
- Wingstop's fixed asset turnover has shown a decreasing trend from 2019 to 2023, starting at 7.17 and decreasing to 5.04. This may suggest a decline in efficiency in utilizing fixed assets to generate revenue.
- Despite the decrease, the ratio remains relatively high, indicating that Wingstop is still efficient in generating sales from its fixed assets.

2. Total Asset Turnover:
- The total asset turnover ratio reflects how efficiently a company is using all its assets to generate sales. A higher ratio implies better asset utilization.
- Wingstop's total asset turnover has fluctuated over the years, ranging from 0.84 to 1.22. This variability may indicate changes in the company's asset management strategies or revenue generation.
- Despite the fluctuations, the total asset turnover has generally improved from 2022 to 2023, which suggests that Wingstop may be becoming more efficient in generating sales relative to its total assets.

In summary, Wingstop Inc's long-term activity ratios indicate that while there has been some fluctuation in efficiency in utilizing fixed and total assets, the company has maintained a relatively high level of asset turnover, which is essential for maintaining healthy financial performance and optimizing operational efficiency.