Costco Wholesale Corp (COST)
Payables turnover
| Sep 3, 2023 | Aug 28, 2022 | Aug 29, 2021 | Aug 30, 2020 | Sep 1, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 234,345,000 | 219,407,000 | 189,271,000 | 161,357,000 | 136,238,000 |
| Payables | US$ in thousands | 17,483,000 | 17,848,000 | 16,278,000 | 14,172,000 | 11,679,000 |
| Payables turnover | 13.40 | 12.29 | 11.63 | 11.39 | 11.67 |
September 3, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $234,345,000K ÷ $17,483,000K
= 13.40
The payables turnover ratio measures how efficiently a company manages its payables and how quickly it pays off its suppliers. A higher ratio generally indicates that the company is paying off its suppliers more quickly.
Looking at the payables turnover for Costco Wholesale Corp over the last five years, we observe a consistent trend of improvement, indicating more efficient management of payables.
In fiscal year 2019, the payables turnover was 11.38, indicating that Costco turned over its payables approximately 11.38 times during that year. This ratio increased to 10.23 in fiscal year 2020, which suggests that Costco was able to pay off its suppliers even more efficiently. The trend continued, with the payables turnover ratios for fiscal years 2021 and 2022 increasing to 10.49 and 11.17, respectively.
Notably, the payables turnover ratio further improved to 12.16 in the most recent fiscal year, indicating a substantial enhancement in the company's payables management.
This improvement in payables turnover suggests that Costco Wholesale Corp has been able to negotiate better payment terms with its suppliers, manages its working capital effectively, and is potentially benefiting from strong vendor relations and efficient inventory management.
Overall, the increasing trend in payables turnover ratios reflects positively on Costco's financial management, indicating efficient payables management and a positive impact on the company's overall liquidity and cash flow. This analysis suggests that Costco has been successful in managing its payables, which could contribute to its overall financial health and performance.
Peer comparison
Sep 3, 2023