American Eagle Outfitters Inc (AEO)

Short-term

Turnover ratios

The activity ratios of American Eagle Outfitters Inc over the past five years indicate the efficiency of the company in managing its inventory, receivables, payables, and working capital.

1. Inventory turnover:
- American Eagle Outfitters Inc has maintained a relatively stable inventory turnover ratio over the past five years, ranging from 8.13 to 10.21.
- The consistency in inventory turnover implies that the company efficiently manages its inventory levels to meet sales demand without excessive stockpiling.

2. Receivables turnover:
- The receivables turnover ratio has shown fluctuations over the years, with the highest ratio observed in 2021 and the lowest in 2022.
- The higher turnover ratio indicates that American Eagle Outfitters Inc collects its receivables more frequently, demonstrating effective credit management practices.

3. Payables turnover:
- The payables turnover ratio has also displayed variability, with the highest ratio recorded in 2022 and the lowest in 2020.
- A higher payables turnover ratio suggests that the company is paying its creditors more promptly, potentially improving relationships with suppliers and managing cash flow efficiently.

4. Working capital turnover:
- The working capital turnover ratio has exhibited fluctuations over the five-year period, with a notable decrease in 2022 compared to 2021.
- A higher working capital turnover ratio indicates that American Eagle Outfitters Inc generates more revenue relative to its working capital, reflecting efficient utilization of resources to generate sales.

Overall, American Eagle Outfitters Inc has demonstrated varying degrees of efficiency in managing its inventory, receivables, payables, and working capital over the years, with each ratio providing insights into different aspects of the company's operational performance.

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Average number of days

Days of Inventory on Hand (DOH) measures how many days it takes for a company to turn its inventory into sales. American Eagle Outfitters Inc's DOH has increased over the past five years, from 38.04 days in 2020 to 44.89 days in 2024. This indicates that the company holds inventory for a longer period before selling it, which may tie up capital and lead to inventory obsolescence.

Days of Sales Outstanding (DSO) calculates the average number of days it takes for a company to collect revenue after making a sale. American Eagle Outfitters Inc's DSO has fluctuated over the past five years, ranging from 10.09 days in 2020 to 21.60 days in 2022. A lower DSO suggests faster collection of receivables, while a higher DSO could indicate potential issues with collection efficiency.

Number of Days of Payables represents how long a company takes to pay its suppliers. American Eagle Outfitters Inc's number of days of payables has varied, with a decrease from 24.35 days in 2020 to 18.80 days in 2024. A shorter payment period to suppliers could suggest improved liquidity but may strain vendor relationships if not managed effectively.

Overall, American Eagle Outfitters Inc's activity ratios show a mixed performance over the five-year period, with fluctuations in its inventory turnover, collection efficiency, and payment terms. Further analysis is necessary to understand the reasons behind these changes and their impact on the company's operational efficiency and financial health.

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Long-term

American Eagle Outfitters Inc's long-term activity ratios have shown relatively positive trends over the past five years. The fixed asset turnover ratio has been consistently increasing from 5.86 in 2020 to 7.38 in 2024. This indicates that the company is generating more revenue from its fixed assets, such as property, plant, and equipment, which is a positive sign of efficient asset utilization.

On the other hand, the total asset turnover ratio has fluctuated over the same period, reaching a peak of 1.48 in 2024. This ratio measures how effectively the company is generating sales from all its assets, including both fixed and current assets. The increase in total asset turnover shows an improvement in the company's overall asset efficiency.

Overall, the increasing trend in the fixed asset turnover ratio coupled with the fluctuating but generally improving total asset turnover ratio suggests that American Eagle Outfitters Inc is effectively using its assets to generate sales and maximize operational efficiency.