Cal-Maine Foods Inc (CALM)

Short-term

Turnover ratios

Cal-Maine Foods Inc's inventory turnover ratio has been relatively consistent over the past five years, ranging from 6.23 to 7.70. This indicates that the company is efficient in managing its inventory levels and converting them into sales. A higher inventory turnover ratio is generally preferable as it indicates strong sales performance.

The receivables turnover ratio has shown some fluctuation over the years, with the highest ratio recorded in 2023 at 16.80 and the lowest in 2022 at 8.12. This ratio measures how efficiently the company is collecting payments from its customers. A higher ratio suggests that the company has effective credit policies and is collecting payments promptly.

The payables turnover ratio for Cal-Maine Foods Inc has also varied over the years, ranging from 20.00 to 26.58. This ratio reflects how quickly the company is paying its suppliers. A higher payables turnover ratio may indicate that the company is paying its bills promptly, while a lower ratio could suggest that the company is taking longer to settle its payables.

The working capital turnover ratio, which measures how effectively the company is using its working capital to generate sales, has shown a downward trend over the past five years. A higher working capital turnover ratio is generally better as it indicates that the company is generating more revenue with the same amount of working capital.

Overall, Cal-Maine Foods Inc's activity ratios paint a picture of a company that is efficient in managing its inventory and receivables, while also generally maintaining timely payments to suppliers. Further analysis and comparison with industry benchmarks could provide additional insights into the company's performance.

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Average number of days

Cal-Maine Foods Inc's activity ratios provide insights into the efficiency of the company's operations in managing its inventory, collecting receivables, and paying its suppliers.

1. Days of Inventory on Hand (DOH):
- The DOH measures how long on average inventory is held before being sold.
- The trend shows a slight improvement in recent years, with inventory turnover becoming more efficient.
- In 2024, the company held inventory for approximately 47.39 days, a slight decrease from the previous year, indicating better management of inventory levels.

2. Days of Sales Outstanding (DSO):
- DSO indicates the average number of days it takes for the company to collect payment after making a sale.
- There was a significant improvement in DSO in 2023 compared to 2022, showing better efficiency in collecting receivables.
- In 2024, the DSO increased slightly to 25.49 days, which suggests a longer collection period compared to the previous year but still reflects an efficient collection process.

3. Number of Days of Payables:
- This ratio indicates how long the company takes to pay its suppliers.
- Cal-Maine Foods Inc has been managing its payables effectively, with a consistent trend of around 13-18 days.
- In 2024, the number of days of payables was 13.73 days, showing a stable payment relationship with suppliers.

Overall, these activity ratios suggest that Cal-Maine Foods Inc has been improving its operational efficiency in managing inventory, collecting receivables, and paying suppliers in recent years. The company's ability to optimize these processes is crucial for maintaining a healthy cash conversion cycle and supporting profitability.

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Long-term

Cal-Maine Foods Inc's long-term activity ratios show fluctuations over the past five years. The fixed asset turnover ratio has decreased from 4.23 in June 2023 to 2.71 in June 2024, indicating that the company generated $2.71 in sales for every dollar invested in fixed assets. This decrease may suggest that the company is utilizing its fixed assets less efficiently in generating sales.

On the other hand, the total asset turnover ratio has also decreased from 1.61 in June 2023 to 1.06 in June 2024. This ratio indicates that for every dollar of assets the company owns, it generated $1.06 in sales. The decline in this ratio may imply that the company's overall asset utilization has also declined.

Overall, the fluctuations in Cal-Maine Foods Inc's long-term activity ratios suggest that the company's efficiency in utilizing both fixed and total assets to generate sales has shown a downward trend over the years. It may be beneficial for the company to investigate further and implement strategies to improve asset utilization efficiency in order to enhance its financial performance.