Dollar General Corporation (DG)

Activity ratios

Short-term

Turnover ratios

	Jan 31, 2025	Feb 2, 2024	Jan 31, 2024	Feb 3, 2023	Jan 31, 2023
Inventory turnover	4.26	5.18	3.86	5.11	3.85
Receivables turnover	—	341.74	—	277.18	—
Payables turnover	—	10.11	—	9.72	—
Working capital turnover	31.36	29.86	30.11	22.23	22.35

Based on the provided data for Dollar General Corporation's activity ratios, we can observe the following trends:

1. Inventory Turnover:
- The inventory turnover ratio indicates how efficiently the company is managing its inventory. Dollar General's inventory turnover ratio has shown fluctuations over the years, ranging from 3.85 to 5.18. A higher inventory turnover ratio suggests that the company is selling its inventory quickly, which is generally seen as positive.

2. Receivables Turnover:
- The receivables turnover ratio reveals how effectively the company is collecting payments from customers. Dollar General had significant variations in this ratio, with values of 277.18 to 341.74. A higher receivables turnover ratio implies that the company is efficient in collecting its accounts receivable.

3. Payables Turnover:
- The payables turnover ratio reflects how efficiently the company is managing its payments to suppliers. Dollar General's payables turnover ratio ranged from 9.72 to 10.11, indicating that the company is paying its suppliers at a fairly consistent rate over the years.

4. Working Capital Turnover:
- The working capital turnover ratio measures how well the company is utilizing its working capital to generate sales. Dollar General's working capital turnover ratio showed an increasing trend over the years, with values ranging from 22.23 to 31.36. A higher working capital turnover ratio suggests that the company is effectively utilizing its resources to generate revenue.

Overall, based on the activity ratios analyzed, Dollar General appears to be efficiently managing its inventory, receivables, payables, and working capital to support its operational activities and generate revenue.

Average number of days

		Jan 31, 2025	Feb 2, 2024	Jan 31, 2024	Feb 3, 2023	Jan 31, 2023
Days of inventory on hand (DOH)	days	85.67	70.42	94.65	71.49	94.82
Days of sales outstanding (DSO)	days	—	1.07	—	1.32	—
Number of days of payables	days	—	36.12	—	37.57	—

The analysis of Dollar General Corporation's activity ratios provides valuable insights into the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH):
- In January 2023, the company held inventory for an average of 94.82 days before selling it, indicating a relatively high level of inventory turnover.
- By February 2024, the DOH decreased significantly to 70.42 days, reflecting improved efficiency in managing inventory levels.
- Overall, the trend shows that Dollar General has been able to reduce the number of days inventory is held on hand over time.

2. Days of Sales Outstanding (DSO):
- DSO represents the number of days it takes for the company to collect payment after making a sale.
- In February 2023 and February 2024, the DSO figures were 1.32 days and 1.07 days, respectively, suggesting that Dollar General collects payments from customers quickly.
- The absence of DSO data for other periods may indicate efficient credit and collection processes that lead to fast cash conversion.

3. Number of Days of Payables:
- This ratio reflects the number of days a company takes to pay its suppliers.
- Dollar General's payables days were 37.57 days in February 2023 and decreased to 36.12 days by February 2024, indicating a relatively stable payment cycle.
- The absence of payables data for other periods makes it challenging to assess the company's consistency in managing its payables effectively.

In conclusion, Dollar General Corporation shows strong operational efficiency, as evidenced by the decreasing trend in Days of Inventory on Hand and stable Days of Sales Outstanding and Number of Days of Payables. Efficient inventory management and cash conversion cycles are essential for sustaining the company's financial health and profitability.

Long-term

	Jan 31, 2025	Feb 2, 2024	Jan 31, 2024	Feb 3, 2023	Jan 31, 2023
Fixed asset turnover	—	6.30	—	7.19	2.38
Total asset turnover	1.30	1.25	1.26	1.29	1.30

The fixed asset turnover ratio measures how efficiently a company generates revenue from its fixed assets. Dollar General Corporation's fixed asset turnover improved significantly from 2.38 in January 2023 to 7.19 in February 2023, indicating a more effective utilization of its fixed assets to generate sales. The ratio then decreased to 6.30 in February 2024, suggesting a slight decline in efficiency but still at a relatively high level.

Total asset turnover, which reflects the company's ability to generate sales from all its assets, remained relatively stable over the period. The ratio stayed around 1.30 from January 2023 to January 2025, indicating that Dollar General was able to generate consistent revenue relative to its total asset base.

Overall, the trends in both fixed asset turnover and total asset turnover suggest that Dollar General Corporation has been effectively managing its assets to generate sales, with varying levels of efficiency over the years.