Abercrombie & Fitch Company (ANF)

Short-term

Turnover ratios

Activity ratios measure how efficiently a company's assets are being managed to generate sales and cash flow. Analyzing Abercrombie & Fitch Company's activity ratios can provide insights into its operational performance over the years.

1. Inventory Turnover:
- Abercrombie & Fitch's inventory turnover has remained relatively stable over the past five years, ranging from 2.66 to 3.39 times. This indicates that the company is effectively managing its inventory levels and selling through its stock on hand.
- The increasing trend in inventory turnover from 2022 to 2024 suggests that Abercrombie & Fitch is selling its inventory more quickly, possibly due to improved inventory management or increasing consumer demand.

2. Receivables Turnover:
- The receivables turnover ratio for Abercrombie & Fitch has shown significant fluctuations over the years, ranging from 35.38 to 54.64 times. This indicates variability in the company's ability to collect receivables efficiently.
- The higher receivables turnover in 2024 compared to previous years suggests that Abercrombie & Fitch has improved its collection process, resulting in quicker conversion of credit sales into cash.

3. Payables Turnover:
- Abercrombie & Fitch's payables turnover has fluctuated over the years, ranging from 3.74 to 6.69 times. A higher payables turnover ratio indicates that the company is taking longer to pay its suppliers, which can indicate favorable credit terms or cash flow management.
- The decrease in payables turnover from 2023 to 2024 may indicate that Abercrombie & Fitch is paying its suppliers more quickly, potentially affecting its cash flow position.

4. Working Capital Turnover:
- The working capital turnover for Abercrombie & Fitch has shown variability over the years, ranging from 4.45 to 11.35 times. A higher working capital turnover suggests that the company is effectively utilizing its working capital to generate sales.
- The significant increase in working capital turnover from 2023 to 2024 indicates that Abercrombie & Fitch has become more efficient in using its working capital to drive revenue growth, potentially through better inventory management or receivables collection.

In conclusion, analyzing Abercrombie & Fitch Company's activity ratios shows that the company has demonstrated varying levels of efficiency in managing its assets and operations over the years. The trends in these ratios can provide valuable insights into the company's operational performance and potential areas for improvement.

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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. Abercrombie & Fitch's DOH has fluctuated over the past five years, ranging from a low of 107.68 days in 2020 to a high of 137.02 days in 2022. A lower DOH typically indicates more efficient inventory management, while a higher DOH may suggest excess or slow-moving inventory.

Days of sales outstanding (DSO) calculates how long it takes for a company to collect its accounts receivable. Abercrombie & Fitch's DSO has shown variability, with the lowest DSO of 6.68 days in 2024 and the highest of 10.32 days in 2023. A lower DSO is generally favorable as it indicates faster collection of receivables and better cash flow management.

Number of days of payables reveals the average number of days it takes a company to pay its suppliers. Abercrombie & Fitch's number of days of payables has seen fluctuations, with the shortest period of 54.53 days in 2020 and the longest of 97.67 days in 2022. A longer payment period may indicate improved liquidity but could harm relationships with suppliers if excessively prolonged.

Overall, Abercrombie & Fitch's activity ratios suggest some variability in inventory management, accounts receivable collection, and payment terms with suppliers over the past five years. Monitoring these ratios can provide insights into the company's operational efficiency and effectiveness in managing working capital.

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Long-term

The fixed asset turnover ratio for Abercrombie & Fitch Company has shown a fairly consistent increasing trend over the past five years, reaching a high of 7.96 in February 2024. This indicates that the company is generating a significant amount of revenue relative to its investment in fixed assets, reflecting strong efficiency in utilizing these long-term resources to generate sales.

On the other hand, the total asset turnover ratio has also displayed an upward trend, albeit with some fluctuations, from 1.02 in February 2020 to 1.44 in February 2024. This suggests that Abercrombie & Fitch is becoming more effective in utilizing all its assets, including fixed and current assets, to generate sales revenue.

Overall, both the fixed asset turnover and total asset turnover ratios indicate that Abercrombie & Fitch Company is improving its efficiency in generating sales from its long-term and total assets, respectively, which reflects positively on the company's operational performance and asset utilization.