Cal-Maine Foods Inc (CALM)

Short-term

Turnover ratios

The activity ratios of Cal-Maine Foods Inc. demonstrate notable trends over the specified periods, reflecting the company's operational efficiency and liquidity management.

Inventory Turnover:
The inventory turnover ratio shows a gradual increase over the analyzed timeframe. It was 6.86 times as of May 31, 2023, rising to 7.68 by June 3, 2023, then slightly decreasing to 6.82 by May 31, 2024. A further increase to 7.70 on June 1, 2024, and eventually reaching 8.15 on May 31, 2025, indicates an overall improvement in the company's ability to convert inventory into sales efficiently. The increasing trend suggests effective inventory management and possibly higher sales velocity in recent periods.

Receivables Turnover:
The receivables turnover ratio experienced a decline from 16.81 times as of May 31, 2023, to 14.32 by May 31, 2024, indicating that the collection period lengthened slightly during this interval. However, it rebounded to 15.65 by May 31, 2025, approaching the earlier levels. These fluctuations suggest periods of slower receivables collection followed by some recovery, impacting cash flow timing but overall maintaining a relatively high turnover rate.

Payables Turnover:
The payables turnover ratio remained relatively stable, with slight fluctuations. It was 23.61 times at the end of May 2023, increased to 26.45 in early June 2023, then stabilized around 23.5 to 26.58 through May 2024 and May 2025. This indicates the company’s ability to efficiently manage its accounts payable cycle, balancing timely payments without excessively stretching payment periods.

Working Capital Turnover:
This ratio declined from 3.34 in May and early June 2023 to 2.29 by May 31, 2024, reflecting a decrease in the efficiency of working capital utilization. However, it increased modestly to 2.57 by May 31, 2025. The variation suggests that the company’s efficiency in utilizing its working capital has experienced some fluctuations, potentially affected by changes in sales volume or operational strategies.

In summary, Cal-Maine Foods Inc.'s activity ratios exhibit a general trend toward increased inventory turnover, indicating improved inventory management, while receivables collection efforts have experienced some variability. The stability in payables turnover reflects consistent creditor management, and the fluctuations in working capital turnover highlight shifts in operational efficiency and resource utilization over the analyzed periods.

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Average number of days

Based on the provided data for Cal-Maine Foods Inc., an analysis of activity ratios reveals the following trends and insights:

Days of Inventory on Hand (DOH):
The DOH figures demonstrate a gradual decrease over the period analyzed. On May 31, 2023, the DOH was approximately 53.24 days, which remained relatively stable through early June 2023 at 47.53 days. By May 31, 2024, this metric increased slightly to 53.53 days, indicating a stabilization or slight increase in inventory holding periods. However, by May 31, 2025, the DOH decreased notably to approximately 44.76 days, suggesting improved inventory turnover or more efficient inventory management practices.

Days of Sales Outstanding (DSO):
The DSO figures show a slight upward trend from May 31, 2023, through May 31, 2024, where the number of days sales outstanding increased from 21.72 days to 25.49 days. This indicates that the company took more time to collect receivables during this period. The DSO then decreased marginally to 23.33 days by May 31, 2025, reflecting some improvement in receivables collection efficiency.

Number of Days of Payables:
The payables period was relatively stable, with minor fluctuations, across the dates. It was about 15.46 days on May 31, 2023, decreased slightly to approximately 13.80 days by June 3, 2023, and remained near this level through subsequent dates, reaching around 15.30 days on May 31, 2025. These figures suggest consistent management of payment terms with suppliers, with no significant change in the company’s approach to settling liabilities.

Overall Interpretation:
The activity ratios indicate a slight improvement in inventory turnover over the analyzed period, as evidenced by the decreasing DOH at the end of the period. The receivables collection period experienced some elongation but corrected somewhat by the end of the period, suggesting manageable credit policies. The stability of payables days indicates consistent supplier payment practices. These combined trends suggest that Cal-Maine Foods Inc. has been working towards optimizing its inventory and receivables cycles while maintaining stable payables management.

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Long-term

The analysis of Cal-Maine Foods Inc.'s long-term activity ratios reveals the following trends:

Fixed Asset Turnover Ratio:
On May 31, 2023, and June 3, 2023, the fixed asset turnover was consistent at 4.23, indicating efficient utilization of fixed assets during this period. However, data for May 31, 2024, is unavailable, and by June 1, 2024, the ratio declined significantly to 2.71. This decrease suggests that the company may have experienced an increase in fixed assets or a decline in sales relative to its fixed assets, leading to less efficient fixed asset utilization. The absence of data for May 31, 2025, prevents further trend analysis, but the sharp drop observed at the beginning of June 2024 warrants attention, as it indicates a potential shift in asset management efficiency.

Total Asset Turnover Ratio:
The total asset turnover was 1.61 on both May 31, 2023, and June 3, 2023, reflecting a stable but moderate efficiency in employing total assets to generate sales. By May 31, 2024, this ratio decreased to approximately 1.06, signifying a reduction in overall asset efficiency. This decline may be attributed to increased total assets not proportionally translating into higher sales, or possibly to strategic expansion or investment phases that temporarily reduce turnover ratios. On June 1, 2024, the ratio remained at 1.06, reinforcing the observed stabilization at a lower efficiency level. Subsequently, by May 31, 2025, the ratio increased to 1.37, indicating a recovery or improvement in asset utilization efficiency over the period.

Overall Assessment:
The data suggests a temporary dip in both fixed and total asset turnover ratios around mid-2024, with a notable decline in fixed asset utilization. However, there is evidence of a rebound in total asset efficiency by May 2025. These trends reflect periods of transition that could be associated with operational adjustments, capital investments, or strategic restructuring. Continual monitoring of these ratios would provide further insight into the company's asset management performance and its effectiveness in translating assets into sales over time.