Warner Music Group (WMG)

Short-term

Turnover ratios

Warner Music Group's inventory turnover ratio has shown fluctuation over the past five years, ranging from a low of 41.97 in 2023 to a high of 59.39 in 2020. This ratio indicates how efficiently the company is managing its inventory levels. The higher the ratio, the faster inventory is being sold, which is generally favorable.

In terms of receivables turnover, Warner Music Group has maintained relatively consistent performance, with the ratio hovering around 5-6 over the same period. This ratio reflects how quickly the company is collecting revenue from its credit sales. A higher ratio suggests more efficient collection practices.

The payables turnover ratio for Warner Music Group has also varied, with a peak of 19.50 in 2024. This ratio assesses how quickly the company is paying off its suppliers and indicates the efficiency of managing its accounts payable. A higher ratio implies that the company is settling its payables promptly.

The working capital turnover ratio data is missing for all years, making it difficult to assess how effectively Warner Music Group utilizes its working capital to generate sales. This ratio typically measures how efficient the company is at using its working capital to generate revenue.

Overall, Warner Music Group's activity ratios suggest varying levels of efficiency in managing inventory, collecting receivables, and paying off payables over the past five years. The company's performance in these areas may indicate its operational effectiveness and liquidity management.

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Average number of days

Warner Music Group's activity ratios depict the efficiency with which the company manages its inventory, collects its receivables, and pays its creditors.

The Days of Inventory on Hand (DOH) measure shows the average number of days it takes for the company to sell its inventory. A decreasing trend in DOH over the years indicates that Warner Music Group has been more efficient in managing its inventory levels, resulting in faster turnover of goods.

The Days of Sales Outstanding (DSO) measure indicates the average number of days it takes for the company to collect payment from its customers. An increasing trend in DSO suggests that Warner Music Group is taking longer to convert its credit sales into cash, which may impact its liquidity and cash flow.

The Number of Days of Payables measure represents the average number of days it takes for the company to pay its suppliers. A decreasing trend in this ratio may indicate that Warner Music Group is taking longer to settle its payables, which can have implications for relationships with suppliers and potential cash flow management.

Overall, while Warner Music Group has improved its inventory turnover efficiency over the years, the increasing DSO and fluctuating payables periods may warrant further analysis to ensure optimal working capital management and cash flow optimization.

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Long-term

Warner Music Group's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into the company's efficiency in utilizing its assets to generate revenue.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio indicates how efficiently the company is using its fixed assets to generate sales.
- Warner Music Group's fixed asset turnover has shown a generally increasing trend over the past five years, reaching its peak in 2022 before slightly decreasing in 2024.
- The high values of fixed asset turnover signal that the company is effectively utilizing its fixed assets to generate revenue, indicating efficient asset management in generating sales.

2. Total Asset Turnover:
- The total asset turnover ratio measures the ability of the company to generate sales from all its assets.
- Warner Music Group's total asset turnover has shown some fluctuations over the years, but the trend indicates a relatively stable performance.
- The ratios ranging between 0.69 to 0.78 imply that the company is generating revenues at a moderate level compared to its total assets, reflecting a consistent performance in utilizing its assets to generate sales.

In conclusion, Warner Music Group's long-term activity ratios suggest that the company efficiently utilizes both fixed and total assets to generate revenue, with the fixed asset turnover showing a particularly strong performance in recent years. This indicates effective asset management practices within the organization.