Bath & Body Works Inc. (BBWI)

Short-term

Turnover ratios

Bath & Body Works Inc. has shown consistent performance in managing its inventory turnover over the past five years. The inventory turnover ratio indicates the number of times the company sells and replaces its inventory during a period. Bath & Body Works Inc. has maintained relatively stable inventory turnover ratios, ranging from 8.28 to 18.40. This suggests that the company efficiently manages its inventory and is effective in converting stock into sales.

In terms of receivables turnover, the company has also demonstrated a stable performance over the same period. The receivables turnover ratio reflects how quickly the company collects its accounts receivable. Bath & Body Works Inc. has consistently achieved high receivables turnover ratios, ranging from 30.41 to 42.22. This indicates that the company efficiently collects payments from its customers and manages its credit effectively.

Moving on to payables turnover, Bath & Body Works Inc. has shown varying performance in managing its accounts payables over the past five years. The payables turnover ratio measures how quickly the company pays its suppliers. While the payables turnover ratios have fluctuated, ranging from 13.50 to 30.50, it is important to note that higher ratios indicate faster payment to suppliers, which can be beneficial in maintaining good supplier relationships and potentially leveraging early payment discounts.

Lastly, the working capital turnover ratio for Bath & Body Works Inc. has depicted fluctuating trends over the analyzed period. The working capital turnover ratio evaluates how effectively the company utilizes its working capital to generate sales. The company's ratios have ranged from 4.12 to 14.31, suggesting varying levels of efficiency in utilizing its working capital to drive revenue generation.

In summary, Bath & Body Works Inc. has demonstrated solid management of its inventory and receivables turnover ratios, indicating efficient operations in these areas. However, the company's payables turnover and working capital turnover ratios have shown more variability, highlighting potential areas for improvement in managing payables and optimizing the utilization of working capital for sales generation.

---

Average number of days

Bath & Body Works Inc.'s activity ratios indicate how efficiently the company manages its inventory, receivables, and payables.

1. Days of inventory on hand (DOH): This ratio shows the average number of days it takes for the company to sell its inventory. Bath & Body Works' DOH has varied over the past five years, ranging from 19.84 days to 44.06 days. The increasing trend in recent years may suggest a potential issue with managing inventory levels or demand forecasting.

2. Days of sales outstanding (DSO): DSO measures how long it takes for the company to collect payments from its customers. Bath & Body Works has kept its DSO relatively stable, with a range of 8.65 days to 12.00 days over the past five years. A consistent DSO indicates efficient collection practices and good credit management.

3. Number of days of payables: This ratio reflects how many days it takes for the company to pay its suppliers. Bath & Body Works has seen fluctuations in its payables days, ranging from 11.97 days to 27.03 days. A decreasing trend in payables days could indicate tighter cash flow management or improved relationships with suppliers.

Overall, Bath & Body Works Inc. should closely monitor its activity ratios to ensure efficient management of inventory, receivables, and payables, which are crucial for maintaining optimal working capital levels and sustaining profitability.

---

Long-term

Bath & Body Works Inc.'s long-term activity ratios indicate the efficiency with which the company utilizes its assets to generate sales. The fixed asset turnover has shown fluctuations over the past five years, ranging from 5.03 in Feb 1, 2020, to a high of 11.17 in Jan 30, 2021. This ratio calculates how effectively the company generates sales from its fixed assets, such as property, plant, and equipment. A higher fixed asset turnover ratio generally indicates better efficiency in utilizing fixed assets to generate revenue.

On the other hand, the total asset turnover has also fluctuated but remained relatively stable over the same period, ranging from 0.98 in Jan 30, 2021, to a peak of 1.31 in Jan 28, 2023. This ratio measures how efficiently the company uses all its assets to generate sales. A total asset turnover ratio above 1 indicates that the company is generating more revenue per dollar of assets.

Comparing the fixed asset turnover and total asset turnover, Bath & Body Works Inc. appears to be more efficient in utilizing fixed assets to generate sales than all its assets combined. However, fluctuations in these ratios over the years may indicate changes in the company's asset management strategies or shifts in the business environment. Further analysis and consideration of other financial metrics are recommended to gain a comprehensive understanding of Bath & Body Works Inc.'s long-term operational efficiency.