Central Garden & Pet Company A (CENTA)

Short-term

Turnover ratios

Central Garden & Pet Company A's activity ratios provide valuable insights into the efficiency of its operations.

1. Inventory Turnover:
The company's inventory turnover has been fluctuating over the past five years, ranging from a high of 4.32 in 2020 to a low of 2.50 in 2022. A higher inventory turnover indicates that the company is selling its inventory more quickly, which is generally positive. However, the decreasing trend in recent years may suggest potential inventory management issues that need to be addressed.

2. Receivables Turnover:
Central Garden & Pet Company A's receivables turnover has been relatively stable, with values between 6.88 and 9.94 over the past five years. A higher receivables turnover indicates that the company is collecting its accounts receivable more efficiently. The consistent performance in this ratio suggests that the company has been effective in managing its credit policies and collections.

3. Payables Turnover:
The payables turnover ratio has been fluctuating as well, with values ranging from 9.25 to 12.38. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently, which can be a sign of efficient cash management. The decreasing trend in this ratio may indicate a shift towards a less favorable payment strategy.

4. Working Capital Turnover:
The working capital turnover ratio reflects how efficiently the company is utilizing its working capital to generate sales. Central Garden & Pet Company A's working capital turnover has fluctuated over the years, with values ranging from 2.33 to 3.23. A higher working capital turnover ratio generally indicates better efficiency in utilizing resources to generate revenue. The company has shown variability in this ratio, which may signal changes in operating efficiency.

Overall, Central Garden & Pet Company A's activity ratios demonstrate varying levels of efficiency in managing its inventory, receivables, payables, and working capital. The company should continue to monitor these ratios to identify areas for improvement and maintain or enhance its operational efficiency over time.

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Average number of days

Days of inventory on hand (DOH) measures how many days it takes for a company to sell its inventory. A lower DOH indicates more efficient inventory management. Central Garden & Pet Company A's DOH has been increasing over the past five years, from 84.50 days in 2020 to 122.59 days in 2024. This indicates that the company is holding onto its inventory for longer periods, potentially tying up cash and increasing carrying costs.

Days of sales outstanding (DSO) measures how long it takes for a company to collect its accounts receivable. A lower DSO indicates more efficient collection of receivables. Central Garden & Pet Company A's DSO has fluctuated over the years but has remained relatively stable. In 2024, it was 37.20 days compared to 53.05 days in 2020. This indicates that the company has been successful in managing its receivables efficiently.

Number of days of payables measures how long it takes for a company to pay its vendors and suppliers. An increase in this ratio may indicate that the company is extending its payment terms, leading to improved cash flow. Central Garden & Pet Company A's number of days of payables has been increasing since 2020, from 39.45 days to 34.39 days in 2024. This suggests that the company has been able to negotiate better payment terms with its suppliers.

Overall, Central Garden & Pet Company A's activity ratios show a mixed performance. While there have been improvements in managing receivables and payables, the increase in days of inventory on hand may raise concerns about inventory management efficiency and potential cash flow implications. Further analysis and monitoring of these ratios are recommended to assess the company's overall operational efficiency.

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Long-term

The long-term activity ratios for Central Garden & Pet Company A provide insights into the efficiency of the company's utilization of its fixed assets and total assets in generating sales over the past five years.

The fixed asset turnover ratio, which measures how efficiently a company is using its fixed assets to generate revenue, has been relatively stable over the period, ranging from 8.41 to 11.02. A higher fixed asset turnover ratio indicates that the company is generating more sales relative to its investment in fixed assets. In this case, the company has shown a consistent ability to efficiently utilize its fixed assets to drive sales, although there was a slight decline in the most recent year.

On the other hand, the total asset turnover ratio, which measures the company's ability to generate sales from all its assets, has shown a declining trend over the five-year period, dropping from 1.15 to 0.90. A decreasing total asset turnover ratio may indicate that the company is becoming less efficient in generating sales from its total asset base. This decline could be attributed to various factors, including changes in the company's business model, product mix, or asset utilization.

Overall, while Central Garden & Pet Company A has demonstrated consistent efficiency in generating sales from its fixed assets, there is a notable decline in its ability to generate sales from its total asset base. It would be advisable for the company to further analyze the factors contributing to this trend and explore opportunities to improve asset utilization efficiency to enhance overall performance in the long term.