AutoZone Inc (AZO)

Short-term

Turnover ratios

AutoZone Inc's inventory turnover, which measures how efficiently the company is managing its inventory, has been relatively stable around 1.4 times per year over the past few quarters. This indicates that the company is selling and restocking its inventory at a consistent pace.

The receivables turnover ratio, reflecting how quickly AutoZone is collecting payments from its customers, has shown some fluctuations but generally has been in the mid-30s range. This indicates that the company has good efficiency in collecting its accounts receivable.

In terms of payables turnover, which shows how quickly AutoZone is paying its suppliers, the ratio has also been relatively consistent around 1.15 to 1.20 in recent quarters. This suggests that the company is managing its payables effectively.

Unfortunately, there is no data available for the working capital turnover to analyze how efficiently AutoZone is utilizing its working capital.

Overall, based on the activity ratios analyzed, AutoZone appears to be efficiently managing its inventory, receivables, and payables turnover, which is a positive indicator of its operational efficiency and financial health.

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Average number of days

The activity ratios of AutoZone Inc, as indicated by Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables, provide insights into the efficiency of the company's operations and management of inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- The trend in DOH fluctuated over the periods analyzed, ranging from 242.50 days to 292.65 days. This suggests that the company may have experienced variations in the management of its inventory levels during the different reporting periods.
- A high DOH value indicates that AutoZone holds its inventory for a relatively longer period before selling it, which could tie up capital and increase carrying costs.
- The highest DOH observed was 292.65 days on November 23, 2019, indicating a need for the company to monitor and optimize its inventory levels to enhance operational efficiency.

2. Days of Sales Outstanding (DSO):
- DSO ranged from 9.44 days to 11.91 days, displaying relatively low values across the periods assessed. This indicates that AutoZone efficiently collects payments from its customers, resulting in a quick turnover of accounts receivable.
- The lower DSO values suggest effective credit and collection policies, enabling the company to convert credit sales into cash quickly.
- The lowest DSO observed was 9.44 days on May 8, 2021, which demonstrates the effectiveness of AutoZone in managing its accounts receivable efficiently.

3. Number of Days of Payables:
- The trend in the number of days of payables ranged from 286.39 days to 342.56 days, reflecting the time taken by AutoZone to pay off its trade payables to suppliers.
- A longer payment period (higher days of payables) can be advantageous for the company as it allows for better cash flow management and potential capital leverage.
- The longest payment period observed was 342.56 days on August 27, 2022, indicating that AutoZone may have benefited from extended payment terms with its suppliers during that period.

In conclusion, the analysis of AutoZone Inc's activity ratios suggests that the company effectively manages its receivables and payables, but may require closer attention to inventory management to optimize operational efficiency and working capital utilization.

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See also:

AutoZone Inc Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

The fixed asset turnover ratio for AutoZone Inc has been relatively stable over the past several quarters, ranging between 2.70 and 3.23. This ratio indicates that AutoZone is generating around 2.70 to 3.23 in revenue for each dollar invested in fixed assets, such as machinery, equipment, and property. A higher fixed asset turnover ratio suggests that the company is using its fixed assets efficiently to generate sales.

On the other hand, the total asset turnover ratio has shown some fluctuations, varying between 0.91 and 1.20. This ratio reflects how efficiently the company is utilizing all its assets to generate revenue. A higher total asset turnover ratio implies that AutoZone is effectively using its assets to generate sales.

In general, based on the trend of these ratios, AutoZone Inc appears to be effectively managing its fixed assets to generate revenue and is also efficient in utilizing its total assets to drive sales. Further analysis and comparison with industry benchmarks would provide a more thorough understanding of the company's long-term asset management efficiency.

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See also:

AutoZone Inc Long-term (Investment) Activity Ratios (Quarterly Data)