Cal-Maine Foods Inc (CALM)

Short-term

Turnover ratios

The activity ratios of Cal-Maine Foods Inc across various periods reveal notable patterns and trends indicative of the company's operational efficiency and management of assets.

Inventory Turnover:
The inventory turnover ratio exhibits an upward trajectory over the period, starting from 4.81 times in August 2022 and gradually increasing to approximately 8.15 times projected for May 2025. This trend suggests a consistent improvement in inventory management, with the company effectively reducing inventory holding periods and enhancing product turnover. The fluctuations within the period are relatively moderate, indicating stable inventory management practices.

Receivables Turnover:
The receivables turnover ratio shows significant volatility, beginning at 10.54 times in August 2022 and peaking at 18.65 times in May 2023. After this peak, it gradually declines but remains relatively high, with projections around 15.65 times for May 2025. The early increase indicates improvements in collection efficiency, but subsequent fluctuations may reflect changes in credit policies, customer payment behaviors, or market conditions. The high ratios imply effective receivables management, although the variability warrants attention for consistent cash flow optimization.

Payables Turnover:
Data for payables turnover is sporadic, with missing entries at certain points. When available, the ratio rises markedly from 7.07 times in August 2022 to peaks around 26.31 times in June 2023, indicating herding or delayed payments to suppliers to optimize cash flow during some periods. After reaching these peaks, the ratios decline somewhat but remain comparatively high, around 13.73 times in May 2025. This pattern suggests periods of extended credit terms, possibly reflecting strategic supplier relationship management or liquidity considerations.

Working Capital Turnover:
The working capital turnover ratio demonstrates a declining trend, decreasing from 4.23 times in August 2022 to around 2.15 – 2.73 times projected in 2024-2025. This decline indicates that the number of sales generated per unit of working capital is decreasing, which could point to increased working capital investment or reduced operational efficiency in utilizing working capital over time.

Overall Interpretation:
The gradual increase in inventory turnover signals improved inventory management, likely leading to enhanced cash flows and reduced holding costs. High and fluctuating receivables turnover ratios point to strong collection practices but also variability that merits continued monitoring. The payables turnover trends, characterized by periods of extended credit, suggest strategic supplier payments to conserve cash. The decline in working capital turnover ratios hints at potential increases in working capital needs or operational adjustments.

Collectively, these activity ratios imply that Cal-Maine Foods Inc has been actively managing its inventory and receivables efficiently, with strategic timing in payables, but might be experiencing changes in operational efficiency reflected in declining working capital turnover ratios. Continued focus on optimizing working capital utilization could further enhance overall operational performance.

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Average number of days

The activity ratios of Cal-Maine Foods Inc., specifically the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days Payables, exhibit notable trends and variations over the analyzed periods.

Inventory Turnover (DOH):
The DOH figures demonstrate a significant decline from approximately 75.88 days in August 2022 to a low of around 44.76 days in May 2025. This trend indicates an improvement in inventory management efficiency, as the company has been able to reduce the amount of time inventory remains on hand. The reduction suggests more effective inventory turnover, potentially driven by optimized supply chain operations or increased sales velocity. Periodically, the DOH experienced slight increases or stability—for instance, rising from around 47.77 days in June 2023 to 52.60 days in August 2024—but the overall long-term trend remains downward, reflective of enhanced inventory efficiency.

Receivables Collection (DSO):
The DSO figures reveal a considerable reduction from approximately 34.63 days in August 2022 to a low of about 22.94 days in May 2024, followed by a slight increase toward 23.33 days in May 2025. The decreasing trend indicates improved collection efficiency and faster receivables turnover over the period. The fluctuation post-May 2024 suggests occasional shifts or seasonal variations, yet the overall movement points toward a more efficient credit collection process over the analyzed timeline.

Payables Period (Number of Days Payables):
The data indicates fluctuating payables periods, with some periods lacking data but generally trending downward from around 51.66 days in August 2022 to approximately 15.30 days in May 2025. Notably, the company has sought to shorten its payable cycle over time, which could suggest efforts to optimize cash flow timing or negotiate more favorable payment terms. Increases in payables days at certain points, such as around August 2023, should be considered in the context of operational policies or vendor relationships, but the overall trend toward shorter payables periods reflects potentially tighter management of vendor liabilities.

Overall Analysis:
The combined activity ratios depict an organization that has significantly improved its operational efficiency. A declining DOH points to better inventory management, reducing holding costs and potential waste. Concurrently, a decreasing DSO indicates enhanced collection processes, improving cash flow. The shortening of payables period suggests a more disciplined approach to managing liabilities, possibly to optimize working capital.

These trends collectively portray a company focusing on tighter operational control, faster asset turnover, and improved liquidity management, although periodic fluctuations may reflect response to seasonal or strategic considerations. Continued monitoring would be essential to confirm whether these improvements are sustainable and aligned with strategic objectives.

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Long-term

The analysis of Cal-Maine Foods Inc.'s long-term activity ratios, based on the provided data, reveals notable trends and fluctuations over the periods examined.

Starting with the fixed asset turnover ratio, which measures how effectively the company utilizes its fixed assets (primarily property, plant, and equipment) to generate sales, there is a general upward trajectory from August 2022 through early May 2023. Specifically, the ratio increased from approximately 3.37 in late August 2022 to a peak of around 5.06 at the end of February 2023, indicating improvements in the efficiency of fixed asset utilization during this period. However, subsequent data points exhibit a declining trend: the ratio decreases to approximately 3.06 by early September 2023, and further falls to 2.43 by late December 2023. The limited data for 2024 show a modest partial recovery to nearly 3.14 in June 2024 before additional periods with missing data, suggesting variability and potential shifts in fixed asset utilization efficiency.

Regarding the total asset turnover ratio, which assesses the overall effectiveness in using all assets to generate sales, the trend displays an initial fluctuation followed by a steady decline from late August 2022 to late 2023. The ratio peaked at 1.81 in late February 2023 but then diminished to approximately 1.09 by late November 2023 and further approximated 1.01 by early December 2023. This downward movement indicates a decreasing efficiency in asset utilization for generating sales. In the subsequent months, slight stabilization or minor increases are observed, with some recovery evident in the ratios reaching approximately 1.37 by May 2025.

Overall, the long-term activity ratios suggest that while Cal-Maine Foods experienced periods of increased asset utilization efficiency, particularly in early 2023, recent periods reflect a decline in the effectiveness of both fixed assets and overall assets in generating sales. The observed fluctuations highlight possible operational adjustments, shifts in production capacity, or other strategic factors affecting asset utilization efficiency over time.