Best Buy Co. Inc (BBY)

Short-term

Turnover ratios

1. Inventory Turnover: Best Buy's inventory turnover ratio has shown fluctuations over the periods analyzed. It decreased from 8.32 on May 2, 2020, to a low of 4.50 on October 28, 2023, before recovering slightly to 6.32 on February 1, 2025. This indicates that the company took longer to sell its inventory during the low points, potentially leading to excess inventory levels. However, the improvement in recent periods suggests better management of inventory levels.

2. Receivables Turnover: Best Buy's receivables turnover ratio also exhibited variability, peaking at 63.15 on April 30, 2022, and hitting a low of 39.78 on February 1, 2025. This suggests that the company may have been efficient in collecting receivables during some periods compared to others. A higher turnover ratio is generally more favorable as it indicates faster collection of outstanding receivables.

3. Payables Turnover: The payables turnover ratio for Best Buy indicates how quickly the company is paying off its suppliers. The ratio ranged from a low of 3.87 on October 31, 2020, to a high of 7.30 on February 3, 2024. A higher turnover ratio implies that the company is paying its suppliers more quickly, which can be beneficial in maintaining good relationships with suppliers and potentially taking advantage of early payment discounts.

4. Working Capital Turnover: Best Buy's working capital turnover ratio, which shows how efficiently the company is using its working capital to generate sales, has also varied significantly. The ratio was notably high at 6,032.29 on November 2, 2024, indicating that the company generated a significant amount of revenue using its working capital during that period. However, the ratio was negative on several occasions (represented as "—"), suggesting potential inefficiencies in utilizing working capital.

In summary, Best Buy's activity ratios display fluctuations over the periods analyzed, indicating varying levels of efficiency in managing inventory, collecting receivables, paying suppliers, and utilizing working capital to generate sales. Monitoring these ratios over time can help assess the company's operational performance and effectiveness in managing its resources.

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Average number of days

Based on the activity ratios provided for Best Buy Co. Inc, we can observe the following trends:

1. Days of Inventory on Hand (DOH):
- Best Buy's DOH fluctuated throughout the periods, ranging from a low of 43.88 days in May 2020 to a high of 86.98 days in November 2024. This indicates the number of days it takes for the company to sell its inventory.
- The average DOH over the periods was approximately 61.50 days, suggesting that Best Buy tends to hold its inventory for around two months before it is sold.
- Notably, there was a significant increase in DOH between October 2021 and October 2023, which may indicate challenges in managing inventory turnover efficiency during that period.

2. Days of Sales Outstanding (DSO):
- DSO ranged from 5.78 days to 9.18 days during the observed periods, showing the average number of days it takes for Best Buy to collect its accounts receivable.
- On average, Best Buy collected its receivables in around 7 days, which suggests efficient credit and collection policies.
- There was a slight increase in DSO from January 2023 to February 2025, indicating a longer collection period towards the latter part of the data timeline.

3. Number of Days of Payables:
- Best Buy's payables days ranged from 48.66 days to 94.31 days, reflecting the average number of days the company takes to pay its suppliers.
- The average payables period was approximately 64.47 days, indicating that Best Buy typically takes a little over two months to settle its payables.
- There were fluctuations in payables days over the periods, with some periods showing longer payment cycles compared to others.

Overall, monitoring these activity ratios can provide insights into Best Buy's inventory management, efficiency in collecting receivables, and payment practices towards suppliers. It is crucial for the company to strike a balance in these areas to ensure optimal working capital management and operational efficiency.

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See also:

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

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Long-term

Best Buy Co. Inc's long-term activity ratios show how efficiently the company is utilizing its assets.

The Fixed Asset Turnover ratio has been relatively stable over the years, indicating that the company is generating sales efficiently from its fixed assets. The ratio increased from 18.79 in May 2020 to peak at 23.48 in July 2021, before slightly declining to 19.57 in February 2025. Overall, Best Buy has been effectively using its fixed assets to generate revenue.

On the other hand, the Total Asset Turnover ratio reflects the company's ability to generate sales from all its assets. This ratio fluctuated more compared to the Fixed Asset Turnover, with a significant increase from 2.15 in October 2020 to a peak of 3.33 in April 2022, before stabilizing around 2.81 in February 2025. The rising trend in this ratio suggests that Best Buy has been utilizing its total assets efficiently to generate revenue.

Overall, both ratios indicate that Best Buy Co. Inc has been effectively managing its assets to drive sales growth and improve operational efficiency over the years.

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See also:

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