Capri Holdings Ltd (CPRI)

Short-term

Turnover ratios

Capri Holdings Ltd's activity ratios provide insights into the efficiency with which the company manages its inventory, receivables, payables, and working capital.

1. Inventory Turnover:
- Capri Holdings Ltd's inventory turnover has been fluctuating over the past five years. It increased from 4.31 in 2022 to 6.26 in 2024, indicating that the company has been more effective in selling its inventory. A higher inventory turnover ratio suggests that the company is efficiently managing its inventory levels and generating sales from its assets.

2. Receivables Turnover:
- The receivables turnover ratio has generally shown a positive trend, with a slight dip in 2022 and then increasing in subsequent years. A higher receivables turnover ratio like that of Capri Holdings Ltd indicates that the company is efficiently collecting payments from its customers, reducing the risk of bad debt and improving cash flow.

3. Payables Turnover:
- Capri Holdings Ltd's payables turnover ratio has also shown an upward trend over the years, indicating that the company is paying its suppliers in a timely manner. A higher payables turnover signifies that the company is managing its payables effectively, possibly taking advantage of favorable credit terms and maintaining good relationships with suppliers.

4. Working Capital Turnover:
- Although the working capital turnover ratio is not available for all years, the ratios for 2023 and 2020 indicate that Capri Holdings Ltd is effectively utilizing its working capital to generate sales revenue. This ratio reflects how efficiently the company is using its working capital to support its operations and generate revenue.

Overall, based on the activity ratios, Capri Holdings Ltd appears to be efficiently managing its inventory, receivables, payables, and working capital, which is essential for sustainable business operations and financial performance. The improvements in these ratios over the years suggest that the company has been focusing on enhancing its operational efficiency and optimizing its working capital cycle.

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Average number of days

Days of inventory on hand (DOH) measures how efficiently the company manages its inventory. A lower DOH indicates faster inventory turnover. Capri Holdings Ltd has shown fluctuations in its inventory management over the past five years, with DOH ranging from 52.63 days in 2020 to 84.77 days in 2022. The decrease in 2021 followed by an increase in 2022 suggests potential changes in inventory management strategies.

Days of sales outstanding (DSO) measures how quickly the company collects its accounts receivable. Lower DSO values indicate faster collection of receivables. Capri Holdings Ltd has generally maintained a relatively stable DSO over the years, ranging from 20.34 days in 2020 to 33.67 days in 2021. The decrease in 2020 followed by an increase in 2021 and subsequent decrease in 2023 suggests variations in the company's credit policies or customer payment behaviors.

Number of days of payables measures the time it takes the company to pay its suppliers. A higher number of days of payables indicates that the company takes longer to pay its suppliers. Capri Holdings Ltd has shown fluctuations in its payables days over the years, ranging from 23.80 days in 2024 to 46.62 days in 2021. The decrease in 2024 followed by an increase in 2021 suggests potential changes in payment terms with suppliers.

Overall, Capri Holdings Ltd's activity ratios demonstrate varying levels of efficiency in managing inventory, collecting receivables, and paying suppliers over the last five years. Monitoring these ratios provides insights into the company's operational effectiveness and potential changes in its working capital management strategies.

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Long-term

The long-term activity ratios of Capri Holdings Ltd indicate the efficiency with which the company is utilizing its assets to generate sales. The fixed asset turnover ratio has been fluctuating over the years, ranging from 8.34 in 2021 to a peak of 11.90 in 2022 before declining slightly to 8.87 in 2024. This ratio suggests that Capri Holdings is generating sales from its fixed assets at varying levels of effectiveness.

On the other hand, the total asset turnover ratio has remained relatively stable around 0.70, with minor fluctuations. This ratio indicates that for every dollar invested in total assets, Capri Holdings is generating sales worth less than a dollar, signaling a lower efficiency in utilizing its total assets to generate revenue.

Overall, the fixed asset turnover ratios suggest some volatility in the efficiency of generating sales from fixed assets, while the total asset turnover ratio remains relatively consistent but below optimal levels. Capri Holdings may need to focus on improving its asset utilization to enhance long-term operational efficiency and profitability.