Warner Music Group (WMG)

Short-term

Turnover ratios

The inventory turnover ratio for Warner Music Group has exhibited a decreasing trend over the past five years, from 55.66 in 2019 to 41.97 in 2023. This suggests that the company is holding onto its inventory for a longer period before selling it.

Conversely, the receivables turnover ratio has shown some fluctuations but has generally remained relatively stable, indicating that the company is efficient in collecting its accounts receivables.

The payables turnover ratio has also displayed some variability but has generally decreased slightly over the years, indicating that the company is taking longer to pay its suppliers.

Regarding the working capital turnover ratio, the data provided does not include values for this metric across the five-year period, making it challenging to assess the efficiency with which Warner Music Group is utilizing its working capital to generate sales.

Overall, analyzing these activity ratios provides insights into Warner Music Group's inventory management, accounts receivable collection efficiency, and payment practices towards its suppliers.

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Average number of days

Warner Music Group's activity ratios provide insights into the efficiency of the company's inventory management, accounts receivable collection, and accounts payable turnover over the past five years.

1. Days of Inventory on Hand (DOH): The company's DOH has been fluctuating over the years, ranging from 6.15 days in 2020 to 8.70 days in 2023. This indicates that Warner Music Group has been holding inventory for shorter periods in some years compared to others. A lower DOH suggests better inventory turnover and efficient management of stock levels.

2. Days of Sales Outstanding (DSO): Warner Music Group's DSO has also varied, with the range spanning from 58.04 days in 2021 to 69.54 days in 2023. A lower DSO indicates that the company is collecting accounts receivable more quickly, whereas a higher DSO could signify potential challenges with credit policies or collections. Overall, the company has shown some improvements in managing accounts receivable over the past five years.

3. Number of Days of Payables: The number of days of payables for Warner Music Group has fluctuated, with the range being from 18.79 days in 2022 to 23.49 days in 2021. A lower number of days of payables suggests that the company is taking longer to pay its suppliers, potentially indicating strong bargaining power or liquidity constraints.

In summary, Warner Music Group's activity ratios reflect fluctuations in inventory management, accounts receivable collection, and accounts payable turnover over the past five years. The company may need to focus on optimizing its inventory levels, improving accounts receivable collection efficiency, and managing payables effectively to enhance overall operational performance and financial health.

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Long-term

Warner Music Group's fixed asset turnover, which measures the efficiency of the company in generating revenue from its investment in fixed assets, has decreased slightly over the five-year period from 2019 to 2023. This indicates that the company is generating less revenue from its fixed assets in recent years.

On the other hand, the total asset turnover ratio, which indicates how effectively the company is utilizing all its assets to generate sales, has also shown a decreasing trend over the same period. This implies that Warner Music Group is becoming less efficient in generating sales from its total assets.

Overall, the declining trends in both fixed asset turnover and total asset turnover ratios suggest that Warner Music Group may need to reevaluate its asset utilization strategies and consider ways to improve efficiency in generating revenue from its assets.