Best Buy Co. Inc (BBY)

Short-term

Turnover ratios

Best Buy Co. Inc's inventory turnover has shown a generally increasing trend over the years, from 6.54 in January 30, 2021, to 6.32 in February 1, 2025. This indicates that the company is managing its inventory efficiently, with an improvement in how quickly it sells its inventory.

On the other hand, the receivables turnover ratio has fluctuated over the years, reaching a peak of 49.67 in January 29, 2022, and then decreasing to 39.78 in February 1, 2025. While the drop in receivables turnover may suggest a longer collection period for receivables, the ratio still indicates that Best Buy is efficient in converting its accounts receivable into cash.

The payables turnover ratio has been relatively stable, increasing from 5.26 in January 30, 2021, to 6.45 in February 1, 2025. This implies that the company is taking more time to pay its creditors, potentially improving its cash flow position.

Regarding the working capital turnover, there is missing data for the years 2022, 2023, and 2024, but in February 1, 2025, the ratio spiked significantly to 199.65. This could indicate a substantial increase in sales relative to the working capital invested, reflecting a very efficient use of working capital to generate revenue.

Overall, Best Buy Co. Inc's activity ratios suggest that the company has been managing its working capital effectively, optimizing its use of inventory and accounts payable, and maintaining an overall efficient operation in converting assets into revenue.

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Average number of days

To analyze Best Buy Co. Inc's activity ratios, we will focus on three key metrics: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

1. Days of Inventory on Hand (DOH):
- Best Buy's inventory turnover has been improving over the years, indicating that the company is managing its inventory more efficiently.
- The trend shows a decrease in the number of days it takes for the company to sell its inventory, from 55.83 days in January 2021 to 53.46 days in February 2024, before slightly increasing to 57.74 days in February 2025.
- Overall, the decreasing trend in DOH suggests that Best Buy is turning its inventory into sales more quickly, which is a positive sign for operational efficiency.

2. Days of Sales Outstanding (DSO):
- Best Buy's DSO has fluctuated over the years, but the general trend indicates that the company is collecting its accounts receivable faster.
- The DSO decreased from 8.19 days in January 2021 to 7.35 days in January 2022, before increasing to 9.18 days in February 2025, showing some variation in the collection period.
- A lower DSO signifies that Best Buy is efficient in collecting payments from its customers, which can improve cash flow and liquidity.

3. Number of Days of Payables:
- Best Buy has been able to negotiate more favorable payment terms with its suppliers, as evidenced by the decreasing trend in the number of days of payables.
- The days of payables decreased from 69.43 days in January 2021 to 56.55 days in February 2025, indicating that the company is taking longer to pay its suppliers.
- Extending the payment period can help Best Buy optimize its working capital management by effectively utilizing funds for other business activities.

In summary, Best Buy Co. Inc has shown improvements in its activity ratios over the years, with efficient inventory management, effective accounts receivable collection, and optimized payables management. These trends indicate a positive operational performance and financial management practices within the company.

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See also:

Best Buy Co. Inc Short-term (Operating) Activity Ratios

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Long-term

Long-term activity ratios provide insights into how effectively a company is utilizing its assets to generate sales over extended periods. In the case of Best Buy Co. Inc, the Fixed Asset Turnover ratio has shown some fluctuations over the years. The ratio increased from 20.91 in January 30, 2021, to 23.00 in January 29, 2022, indicating that Best Buy was able to generate more sales relative to its fixed assets in the following year. However, from January 29, 2022, the ratio decreased to 19.68 in January 28, 2023, and further to 19.23 in February 3, 2024, before slightly increasing to 19.57 in February 1, 2025. These fluctuations suggest some variability in how efficiently Best Buy is utilizing its fixed assets to generate sales over the long term.

On the other hand, the Total Asset Turnover ratio, which measures the company's ability to generate sales from all its assets, has also shown some changes over the years. The ratio increased from 2.48 in January 30, 2021, to 2.96 in January 29, 2022, implying that Best Buy was efficient in generating sales relative to its total assets in the following year. However, the ratio then decreased to 2.93 in January 28, 2023, 2.90 in February 3, 2024, and further to 2.81 in February 1, 2025. These fluctuations indicate some variations in how effectively Best Buy is using all its assets to generate sales over the long term.

Overall, analyzing both the Fixed Asset Turnover and Total Asset Turnover ratios provides a comprehensive view of Best Buy's long-term activity efficiency in utilizing assets to drive sales. The fluctuations observed in these ratios suggest that Best Buy may need to focus on optimizing its asset utilization strategies to improve its long-term performance and profitability.

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See also:

Best Buy Co. Inc Long-term (Investment) Activity Ratios