Carter’s Inc (CRI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.36 | 2.13 | 1.60 | 1.98 | 2.10 |
| Receivables turnover | 14.60 | 15.84 | 15.86 | 14.81 | 15.91 |
| Payables turnover | 4.78 | 4.72 | 4.51 | 3.15 | 2.67 |
| Working capital turnover | 4.49 | 4.94 | 4.77 | 2.90 | 2.57 |
Inventory Turnover:
Carter’s Inc's inventory turnover ratio has shown slight fluctuations over the past five years. In 2020, the ratio was 2.10, decreasing to 1.98 in 2021, and further dropping to 1.60 in 2022. However, there was a notable improvement in 2023 with a ratio of 2.13, followed by a significant increase to 2.36 in 2024. Overall, the company seems to have effectively managed its inventory levels in recent years, with a marked improvement in 2024 indicating a more efficient utilization of its inventory.
Receivables Turnover:
The receivables turnover ratio of Carter’s Inc has remained relatively stable over the past five years. The company had a turnover ratio of 15.91 in 2020, which then decreased slightly to 14.81 in 2021 but subsequently increased to 15.86 in 2022. There was a slight decline in 2024 to 14.60. This indicates that Carter’s has been efficient in collecting outstanding receivables from customers, with only minor fluctuations in its turnover ratio.
Payables Turnover:
The payables turnover ratio for Carter’s Inc has been on an upward trend from 2020 to 2024. In 2020, the ratio was at 2.67, which then increased to 3.15 in 2021, and continued to rise significantly to 4.51 in 2022. The ratio further increased in 2023 to 4.72 and reached 4.78 in 2024. This indicates that the company has been extending its payment periods to suppliers, which may have positive implications for its cash flow and working capital management.
Working Capital Turnover:
Carter’s Inc's working capital turnover ratio has shown a general increasing trend over the past five years. The ratio was 2.57 in 2020, which then rose to 2.90 in 2021 and significantly increased to 4.77 in 2022. There was a slight uptick in 2024 to 4.49. This points towards the company efficiently utilizing its working capital to generate sales revenue, with a notable peak in 2022 indicating improved efficiency in its working capital management practices.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 154.56 | 171.39 | 228.38 | 184.64 | 173.64 |
| Days of sales outstanding (DSO) | days | 25.01 | 23.04 | 23.01 | 24.65 | 22.94 |
| Number of days of payables | days | 76.37 | 77.27 | 81.00 | 116.03 | 136.81 |
Carter’s Inc activity ratios provide insights into the efficiency of the company's operations and management of its working capital.
1. Days of Inventory on Hand (DOH):
- The company's Days of Inventory on Hand increased from 173.64 days in 2020 to 228.38 days in 2022, before decreasing to 154.56 days in 2024.
- A higher DOH indicates that Carter’s Inc may be carrying excess inventory, potentially leading to higher storage costs and obsolescence risks.
- The fluctuation in DOH over the years suggests a need for the company to better manage its inventory levels to optimize working capital utilization.
2. Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding remained relatively stable over the years, ranging from 22.94 days in 2020 to 25.01 days in 2024.
- A consistent DSO indicates that Carter’s Inc has been efficient in collecting its accounts receivable, minimizing the risk of bad debts and improving cash flow.
- However, a slight increase in DSO in 2024 may warrant attention to ensure timely collection of outstanding payments from customers.
3. Number of Days of Payables:
- The Number of Days of Payables decreased significantly from 136.81 days in 2020 to 76.37 days in 2024.
- A lower number of days of payables suggests that Carter’s Inc has been able to extend its payment terms with suppliers, potentially improving cash flow and working capital management.
- The decreasing trend in payables days indicates that the company is efficiently managing its payables turnover, which could lead to better relationships with suppliers.
Overall, the analysis of Carter’s Inc activity ratios highlights the importance of maintaining a balance between inventory management, accounts receivable collection, and payables turnover to optimize operational efficiency and working capital utilization.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 15.71 | 15.90 | 16.59 | 15.86 | 11.31 |
| Total asset turnover | 1.17 | 1.22 | 1.29 | 1.07 | 0.87 |
Carter’s Inc has shown a significant improvement in its fixed asset turnover ratio over the past five years, indicating that the company is generating more sales relative to its investment in fixed assets. The ratio increased from 11.31 in 2020 to 15.71 in 2024, with fluctuations in between. This trend suggests effective asset utilization and operational efficiency in utilizing fixed assets to generate revenue.
Similarly, the total asset turnover ratio for Carter’s Inc has also shown a consistent upward trend over the same period. This ratio increased from 0.87 in 2020 to 1.17 in 2024, indicating that the company is generating more sales relative to its total assets. This improvement reflects the company's ability to efficiently generate revenue from its total asset base.
Overall, the increasing trend in both fixed asset turnover and total asset turnover ratios signifies that Carter’s Inc has been successful in optimizing its asset utilization and improving its efficiency in generating revenue from its assets over the past five years.