Dick’s Sporting Goods Inc (DKS)

Short-term

Turnover ratios

Inventory turnover for Dick’s Sporting Goods Inc has ranged from 3.82 to 4.53 over the past five years, with the most recent figure standing at 4.25. This ratio indicates that the company is efficiently managing its inventory, with higher values suggesting that inventory is moving more frequently.

Receivables turnover has shown a decreasing trend from 164.98 to 109.41 over the same period, with the latest figure standing at 109.41. This decreasing trend could imply that the company is taking longer to collect payments from customers, which may lead to potential cash flow challenges.

The payables turnover ratio has fluctuated between 7.03 and 9.40 over the past five years, with the most recent value at 9.39. This ratio suggests that Dick’s Sporting Goods Inc is paying its suppliers efficiently, with higher values indicating faster payment cycles.

The working capital turnover ratio has declined significantly from 26.30 to 6.09 over the past five years. This decline may indicate that the company is generating less revenue relative to its working capital, which could be a cause for concern regarding its efficiency in utilizing its current assets to generate sales.

---

Average number of days

Dick’s Sporting Goods Inc’s activity ratios show the efficiency of its inventory management, accounts receivable collection, and accounts payable payment processes over the past five years.

The Days of Inventory on Hand (DOH) has fluctuated between 81.72 days to 95.59 days. In 2024, the DOH was 85.95 days, indicating that on average, the company holds inventory for approximately 86 days before selling it. A lower DOH would imply faster inventory turnover, which could potentially reduce storage costs and the risk of holding obsolete inventory.

On the other hand, the Days of Sales Outstanding (DSO) has ranged from 2.09 days to 3.34 days. In 2024, the DSO was 3.34 days, illustrating that on average, it takes the company approximately 3 days to collect payment from its customers for sales made on credit. A lower DSO indicates more efficient accounts receivable collection, improving the company's cash flow and reducing the risk of bad debts.

Lastly, the Number of Days of Payables shows the average number of days it takes for the company to pay its suppliers. This ratio has fluctuated between 38.88 days to 51.91 days. In 2024, the company took approximately 39 days to pay its suppliers. A longer payment period could indicate better cash flow management as the company delays payments, potentially freeing up cash for other uses.

Overall, improvements in these activity ratios, particularly lower DOH and DSO, combined with a balanced approach to managing accounts payable, can enhance Dick’s Sporting Goods Inc’s operational efficiency and financial performance.

---

Long-term

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. For Dick's Sporting Goods Inc, the trend in the fixed asset turnover ratio over the past five years has shown fluctuations, with a peak of 9.36 in January 2023 and a low of 6.20 in February 2020. The recent ratio of 7.95 as of February 3, 2024, indicates that the company generated $7.95 in sales for every dollar invested in fixed assets. This suggests that Dick's Sporting Goods Inc has improved its efficiency in utilizing its fixed assets to generate revenue compared to the previous year.

On the other hand, the total asset turnover ratio measures how effectively a company is using all its assets to generate revenue. Dick's Sporting Goods Inc has shown a relatively stable total asset turnover ratio over the past five years, ranging from 1.23 in January 2021 to 1.40 in February 2024. The ratio of 1.40 as of February 3, 2024, indicates that the company generated $1.40 in sales for every dollar of total assets. This suggests that Dick's Sporting Goods Inc has efficiently utilized its total assets to generate revenue, with a slight improvement in performance compared to the previous year.

Overall, the trend in both fixed asset turnover and total asset turnover ratios for Dick's Sporting Goods Inc indicates variations in efficiency in utilizing assets to generate revenue over the years. The company's ability to consistently improve or maintain these ratios reflects its effectiveness in managing its assets to drive sales growth.