Coty Inc (COTY)

Short-term

Turnover ratios

The activity ratios of Coty Inc. over the observed period demonstrate a nuanced picture of operational efficiency and working capital management.

Inventory Turnover: This ratio exhibits fluctuations within a relatively narrow range, generally oscillating between approximately 2.35 and 3.20. A higher turnover indicates more efficient inventory utilization, while lower values suggest increased inventory holding periods. Notably, the turnover rate experienced a declining trend from a peak of 3.20 at the end of 2020 to a low of 2.35 in mid-2023, potentially signaling slower inventory movement or challenges in inventory management. However, from mid-2023 onward, the ratio shows signs of recovery, reaching approximately 2.98 by March 2025, which may indicate improvements in inventory turnover efficiency.

Receivables Turnover: This ratio displays considerable variation, with values ranging from approximately 7.19 to 13.40. Higher receivables turnover indicates quicker collection of accounts receivable, which is generally favorable. The data suggests periods of increased collection efficiency, particularly from March 2022 onwards, where the ratio often exceeds 10. However, there are instances such as in mid-2021, where the ratio dropped to 7.19, indicating a slower collection period. Data gaps in late 2023 and early 2024 limit continuous analysis, but subsequent figures point towards improved receivables management, reaching around 11.19 by mid-2025.

Payables Turnover: This ratio indicates the company’s payment efficiency to suppliers, with values fluctuating between 1.10 and 2.10. A decreasing trend from over 2.10 in September 2020 to around 1.10 in mid-2025 suggests extended payment periods, which can optimize cash flow but may also risk supplier relations if extended excessively. Periods of stability are visible from 2021 to 2023, with some upward movement in 2024, signaling a slight shortening of payables.

Working Capital Turnover: This ratio is only available for a limited period, specifically at 1.69 as of September 2020, with no subsequent data. The absence of further figures restricts comprehensive analysis of working capital management trends over time.

Overall, Coty Inc.'s activity ratios indicate efforts to balance inventory management, receivables collection, and payables payment in line with operational priorities. The trends suggest periods of operational efficiency improvements, particularly in receivables management. However, fluctuations in inventory turnover point to ongoing challenges in managing stock movement, while the extended payables period highlights a strategy focusing on cash flow optimization, albeit with the potential risk of strained supplier relationships.

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Average number of days

The activity ratios for Coty Inc., specifically Days of Inventory on Hand (DOH), Days Sales Outstanding (DSO), and Days Payables Outstanding (DPO), reveal significant insights into the company's operational efficiency and liquidity management over the analyzed periods.

Days of Inventory on Hand (DOH):
Initially, in September 2020, the company maintained an inventory turnover period of approximately 116.6 days. Over subsequent quarters, this figure fluctuated, reaching a high of 155.2 days in June 2024 and September 2024, before decreasing again to around 129.7 days by the end of 2024 and into early 2025. The overall trend indicates a gradual increase in inventory holding periods, suggesting that Coty is holding onto inventory longer over time. This could be attributable to strategic inventory buildup, changes in supply chain dynamics, or efforts to align inventory with anticipated sales demand. The cyclical nature and overall upward trend imply a potential slowdown in inventory turnover efficiency.

Days of Sales Outstanding (DSO):
DSO figures, which measure the duration to collect receivables, exhibited variability across the period. In the early stages (2020), DSO ranged from approximately 34 to 42 days, reflecting prompt collection efforts. Notably, in the fourth quarter of 2021, DSO spiked to 50.77 days, indicating a slowdown in receivables collection. For most of 2022 and early 2023, DSO remained relatively stable around 27 to 40 days. Data for late 2023 and 2024 show a reversion towards the lower end of the scale, around 28 to 36 days, with the latest figures (June and September 2025) around 32 to 35 days, suggesting an overall consistency in receivables management with minor fluctuations. The DSO trend indicates that Coty generally maintains efficient cash collection, though occasional deviations imply periods of slower receivables turnover.

Number of Days of Payables (DPO):
Coty’s payable periods display considerable variability, generally remaining high relative to industry norms. Throughout the observed periods, DPO fluctuated from approximately 174 days (September 2020) to a high of over 332 days (June 2025). For most of 2020 and 2021, DPO extended beyond 200 days, peaking at approximately 271 days in December 2021. Despite some mid-period reductions, the trend remains toward longer payable periods, culminating in a projected substantial extension to nearly 333 days in mid-2025. This reflects a tendency to delay payments to suppliers, possibly as a financing strategy to conserve cash or optimize working capital. The overall pattern demonstrates a significant increase in the length of payables, indicating an aggressive extension policy that may impact supplier relationships but provides short-term liquidity benefits.

Summary of Trends:
Over the analysis period, Coty Inc. shows a tendency towards lengthening its inventory and payable periods, with DOH and DPO increasing notably, especially in recent years. This suggests a strategic shift towards longer working capital cycles, possibly driven by attempts to extend liquidity or accommodate supply chain adjustments, while receivables management remains relatively stable and efficient. The increasing inventory and payable days could pose risks related to overstocking and supplier relations but also offer insights into the company's approach to managing cash flow and operational flexibility.

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Long-term

An analysis of Coty Inc.'s long-term activity ratios reveals insights into the company's asset utilization efficiency over recent periods. The fixed asset turnover ratio, which measures how effectively the company utilizes its fixed assets to generate sales, exhibits variability across the reporting dates. Notably, the ratio experienced fluctuations, peaking at 7.79 as of June 30, 2023, indicating a period of improved utilization of fixed assets. However, a decline to approximately 5.98 by September 30, 2023, suggests some reduction in fixed asset efficiency.

Conversely, the total asset turnover ratio, reflecting the company's ability to generate sales from its overall assets, demonstrates a steady upward trend over the analyzed periods. Starting at 0.31 on September 30, 2020, it gradually increased to 0.52 by the end of March 2024, indicating progressively improved overall asset utilization. This trend suggests that Coty Inc. has been effectively leveraging both fixed and total assets to support sales growth during this timeframe.

Overall, the fixed asset turnover ratio's fluctuations may point to changes in asset management strategies or capital investments that temporarily impacted fixed asset efficiency, whereas the consistent increase in the total asset turnover ratio reflects ongoing improvements in the company's overall asset utilization. These combined trends are indicative of a company refining its operational efficiency concerning its asset base.