Coty Inc (COTY)

Short-term

Turnover ratios

The activity ratios for Coty Inc provide insights into the efficiency with which the company manages its inventory, receivables, payables, and working capital.

1. Inventory Turnover: Indicates how many times a company sells and replaces its inventory during a specific period. Coty's inventory turnover has been relatively consistent over the years, ranging from 5.87 to 8.92. A higher turnover ratio suggests that Coty is effectively managing its inventory and converting it into sales.

2. Receivables Turnover: Measures how efficiently a company collects cash from its customers. Coty's receivables turnover has shown fluctuations but generally remains robust, ranging from 7.81 to 13.92. A higher turnover ratio indicates that the company has effective credit policies and is promptly collecting receivables.

3. Payables Turnover: Reflects how quickly a company pays off its suppliers. Coty's payables turnover has also been consistent, ranging from 3.47 to 5.08. A lower turnover ratio suggests that Coty takes longer to pay its suppliers, potentially indicating favorable credit terms.

4. Working Capital Turnover: Compares a company's net sales to its working capital, measuring how efficiently Coty utilizes its working capital to generate sales. The data for this ratio is missing for the years provided, indicating that it was not disclosed or calculated.

Overall, Coty Inc's activity ratios suggest that the company efficiently manages its inventory, receivables, and payables, contributing to its operational efficiency and financial performance.

---

Average number of days

The activity ratios for Coty Inc over the past five years provide valuable insights into the company's efficiency in managing inventory, sales, and payables.

1. Days of Inventory on Hand (DOH):
- Coty's DOH has fluctuated over the years, ranging from a low of 40.94 days in 2020 to a high of 62.17 days in 2023.
- In 2024, the DOH decreased to 50.06 days, indicating that the company held inventory for approximately 50 days before selling it.
- Generally, a lower DOH suggests more efficient inventory management, as the company is able to sell inventory quickly, generating cash flow.

2. Days of Sales Outstanding (DSO):
- Coty's DSO has varied significantly, from 26.21 days in 2023 to 46.71 days in 2021.
- In 2024, the DSO increased slightly to 27.61 days, suggesting that on average, it takes Coty around 28 days to collect sales revenue.
- A lower DSO is favorable as it indicates the company is able to collect payments from customers faster, improving cash flow.

3. Number of Days of Payables:
- Coty's days of payables have also fluctuated, with the number of days ranging from 71.85 days in 2020 to 105.24 days in 2023.
- In 2024, the days of payables decreased to 92.09 days, indicating that the company takes approximately 92 days to pay its suppliers.
- A higher number of days of payables can suggest that Coty is effectively managing its working capital by delaying payments to suppliers, which can help improve liquidity.

Overall, when analyzing Coty Inc's activity ratios, it is essential to consider the trends over time and compare them to industry benchmarks to assess the company's efficiency in managing inventory, sales, and payables.

---

Long-term

The fixed asset turnover ratio for Coty Inc has shown an increasing trend over the past five years, indicating that the company has been more efficient in generating sales relative to its investment in fixed assets. This suggests that Coty has been able to utilize its fixed assets more effectively to generate revenue.

In contrast, the total asset turnover ratio has also increased steadily over the years, indicating that the company has been improving its overall efficiency in generating sales relative to its total assets. This suggests that Coty has been able to generate more revenue from its total assets, including both fixed and current assets.

Overall, the increasing trend in both fixed asset turnover and total asset turnover ratios reflects positively on Coty's ability to manage its assets efficiently and effectively in generating sales. This could indicate improved operational efficiency and asset utilization, which are key factors for sustainable long-term growth and profitability.