Advance Auto Parts Inc (AAP)

Short-term

Turnover ratios

### Analysis of Advance Auto Parts Inc Activity Ratios:

#### 1. Inventory Turnover:
- The inventory turnover ratio for Advance Auto Parts Inc has fluctuated over the analyzed periods, ranging from 1.39 to 1.89.
- A decreasing trend is observed in the inventory turnover ratio, indicating a longer time taken to sell inventory.

#### 2. Receivables Turnover:
- Receivables turnover data was missing for most of the periods. However, the available data shows a range of 11.31 to 15.38.
- The company appears to have a relatively efficient collection process for accounts receivable.

#### 3. Payables Turnover:
- The payables turnover ratio also had missing data for various periods, but the available data ranged from 2.06 to 2.44.
- The company is managing its accounts payables effectively, with a consistent turnover ratio.

#### 4. Working Capital Turnover:
- The working capital turnover ratio for Advance Auto Parts Inc varied significantly between 5.63 and 17.55 over the analyzed periods.
- A higher turnover ratio indicates efficient utilization of working capital to generate sales.

#### Overall Assessment:
- Advance Auto Parts Inc shows varying trends in its activity ratios, with some ratios indicating efficient operations (e.g., receivables turnover, payables turnover), while others suggest areas for improvement (e.g., inventory turnover).
- Monitoring these ratios can provide insights into the company's operational efficiency and liquidity management strategies.

---

Average number of days

Advance Auto Parts Inc's Days of Inventory on Hand (DOH) ratio has fluctuated over the years, with the number of days inventory being held ranging from a low of 193.42 days to a high of 262.58 days. This indicates that the company has been holding inventory for varying lengths of time, which may impact its liquidity and storage costs.

The Days of Sales Outstanding (DSO) ratio, on the other hand, shows the number of days it takes for the company to collect revenue from its sales. The DSO ratio has exhibited some variability, with values ranging from a low of 23.73 days to a high of 32.26 days. A lower DSO indicates quicker collection of receivables, which could signify efficient credit management and cash flow.

Lastly, the Number of Days of Payables ratio displays the number of days it takes for the company to pay its suppliers. In this case, Advance Auto Parts Inc's payables period has fluctuated between a low of 149.88 days to a high of 177.57 days. A longer payables period suggests that the company is taking longer to pay its obligations, potentially improving its cash flow position but also indicating possible strains on supplier relationships.

---

Long-term

The Fixed Asset Turnover ratio measures how effectively a company is utilizing its fixed assets to generate sales. In the case of Advance Auto Parts Inc, the Fixed Asset Turnover ratio fluctuated over the years with values ranging from 2.42 to 7.50.

The company experienced significant improvements in its Fixed Asset Turnover ratio from September 30, 2021, to June 30, 2023, showing efficient use of fixed assets to generate revenue. However, there were fluctuations in the ratio in the following periods, indicating some variability in the company's asset management efficiency.

On the other hand, the Total Asset Turnover ratio reflects the efficiency of the company in generating sales from all assets. Advance Auto Parts Inc's Total Asset Turnover ratio ranged from 0.81 to 0.99 during the period under consideration.

The company generally maintained a stable Total Asset Turnover ratio, with slight fluctuations observed. These fluctuations may indicate changes in the company's overall asset management efficiency and effectiveness in generating sales revenue relative to its total assets.

Overall, the analysis of the long-term activity ratios for Advance Auto Parts Inc suggests that the company has shown varying levels of efficiency in utilizing both fixed and total assets to generate sales revenue over the specified period.