ELF Beauty Inc (ELF)

Activity ratios

Short-term

Turnover ratios

	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
Inventory turnover	4.66	6.33	4.38	5.59	5.61
Receivables turnover	8.21	8.49	8.55	7.81	9.30
Payables turnover	11.01	16.39	19.26	20.22	20.92
Working capital turnover	5.71	2.95	3.04	3.24	3.40

Activity ratios measure how efficiently a company manages its assets and liabilities to generate sales. Let's analyze the activity ratios of ELF Beauty Inc based on the provided data:

1. Inventory Turnover:
- The inventory turnover ratio measures how effectively a company manages its inventory. ELF Beauty Inc's inventory turnover has fluctuated over the past five years, ranging from 4.38 to 6.33. A higher turnover indicates efficient management of inventory levels.

2. Receivables Turnover:
- The receivables turnover ratio reflects how quickly a company collects its accounts receivable. ELF Beauty Inc's receivables turnover has been relatively consistent, ranging from 7.81 to 9.30. A higher turnover implies faster collection of receivables.

3. Payables Turnover:
- The payables turnover ratio shows how quickly a company pays its suppliers. ELF Beauty Inc's payables turnover has decreased over the years, indicating a longer payment cycle to suppliers. However, a lower turnover may also suggest better cash management.

4. Working Capital Turnover:
- The working capital turnover ratio indicates how efficiently a company uses its working capital to generate sales. ELF Beauty Inc's working capital turnover has shown an increasing trend, suggesting improved utilization of working capital. A higher turnover reflects better efficiency in generating sales with available working capital.

Overall, ELF Beauty Inc's activity ratios provide insights into its operational efficiency and management of assets and liabilities. Monitoring these ratios over time can help assess the company's performance and identify areas for improvement in its working capital management and inventory control.

Average number of days

		Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
Days of inventory on hand (DOH)	days	78.27	57.64	83.29	65.31	65.07
Days of sales outstanding (DSO)	days	44.43	43.00	42.71	46.71	39.23
Number of days of payables	days	33.14	22.27	18.95	18.05	17.45

The activity ratios of ELF Beauty Inc reflect the efficiency of the company in managing its inventory, receivables, and payables over the past five years.

1. Days of Inventory on Hand (DOH):
The DOH ratio indicates the number of days it takes for the company to sell its entire inventory. ELF Beauty Inc's DOH has fluctuated over the past five years, ranging from a low of 57.64 days in 2023 to a high of 83.29 days in 2022. A lower DOH is generally preferred as it signifies a quicker turnover of inventory, implying that the company is efficient in its inventory management. ELF Beauty Inc should aim to reduce its DOH to improve its liquidity and reduce holding costs.

2. Days of Sales Outstanding (DSO):
The DSO ratio measures the average number of days it takes for the company to collect its accounts receivable. ELF Beauty Inc's DSO has varied over the years, with the lowest being 39.23 days in 2020 and the highest being 46.71 days in 2021. A lower DSO is preferable as it indicates faster collection of receivables, leading to improved cash flow. ELF Beauty Inc should continue to focus on reducing its DSO to enhance its liquidity and working capital management.

3. Number of Days of Payables:
The number of Days of Payables ratio shows the average number of days it takes for the company to pay its suppliers. ELF Beauty Inc's payables period has increased over the years, indicating that the company is taking longer to settle its payables. While extending payables may provide short-term liquidity benefits, it could strain supplier relationships in the long run. ELF Beauty Inc should carefully manage its payables to maintain a balance between cash flow needs and supplier relationships.

Overall, ELF Beauty Inc should aim to improve its inventory turnover, accelerate its receivables collection, and effectively manage its payables to enhance its working capital efficiency and overall financial performance.

Long-term

	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
Fixed asset turnover	72.77	73.23	36.82	22.80	16.11
Total asset turnover	0.90	0.97	0.79	0.64	0.61

ELF Beauty Inc's long-term activity ratios demonstrate the efficiency in which the company utilizes its assets over the years.

The fixed asset turnover measures how effectively the company generates sales revenue from its investment in fixed assets. The trend for ELF Beauty Inc's fixed asset turnover indicates a consistent improvement from 2019 to 2022, with a substantial increase in the ratio from 16.11 in 2020 to 72.77 in 2024. This suggests that the company has been able to generate significantly more sales from its fixed assets over the years, indicating improved operational efficiency and better utilization of its long-term assets.

On the other hand, the total asset turnover ratio measures how well the company generates sales revenue from all its assets (both fixed and current). ELF Beauty Inc's total asset turnover ratio has also shown an increasing trend, albeit with fluctuations, from 2019 to 2023, with a peak of 0.97 in 2023. However, there was a slight decline in the ratio to 0.90 in 2024. This indicates that the company is generating more revenue relative to its total assets, but there may be a need to further optimize the utilization of all its assets to sustain or improve this ratio in the future.

Overall, the data implies that ELF Beauty Inc has made significant progress in efficiently utilizing its fixed assets to drive sales, as evidenced by the notable improvement in fixed asset turnover. However, the company may need to focus on optimizing its total asset turnover by effectively managing both fixed and current assets to enhance overall operational efficiency and profitability.