Calavo Growers Inc (CVGW)
Working capital turnover
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 967,829 | 1,188,450 | 1,063,150 | 1,022,360 | 1,197,400 |
| Total current assets | US$ in thousands | 133,370 | 125,674 | 152,641 | 135,895 | 127,515 |
| Total current liabilities | US$ in thousands | 81,746 | 101,953 | 114,624 | 106,331 | 90,629 |
| Working capital turnover | 18.75 | 50.10 | 27.97 | 34.58 | 32.46 |
October 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $967,829K ÷ ($133,370K – $81,746K)
= 18.75
The working capital turnover measures the efficiency of a company in using its working capital to generate sales. A higher working capital turnover indicates that the company is effectively utilizing its working capital to generate sales.
Looking at the data for Calavo Growers, Inc, we can see that the working capital turnover has fluctuated over the past five years. In 2023, the working capital turnover stood at 18.83, representing a considerable decrease from the previous year's figure of 50.21. This suggests a potential decline in the company's efficiency in utilizing its working capital to generate sales.
It's important to note that while a high working capital turnover is generally desirable, an extremely high ratio may indicate an overly aggressive approach to sales generation, potentially stretching the company's liquidity. Conversely, a low working capital turnover may suggest underutilization of working capital, which could indicate inefficiency in managing resources.
Therefore, Calavo Growers, Inc should carefully analyze the reasons for the significant decrease in its working capital turnover in 2023 and consider implementing measures to optimize the utilization of its working capital for sales generation in order to improve overall efficiency.