Five Below Inc (FIVE)

Short-term

Turnover ratios

Five Below Inc's inventory turnover ratio has been consistently strong over the past several periods, ranging from 3.86 to 6.58, indicating that the company is efficiently managing its inventory by selling and replacing goods effectively. This suggests that Five Below is effectively moving its products through the supply chain and reducing the risk of obsolete inventory.

The lack of data for receivables turnover suggests that Five Below Inc possibly operates on a cash basis or has minimal accounts receivable, which can be seen as positive as it implies strong cash flow management and minimal credit risk.

Payables turnover has shown a generally consistent trend, ranging from 7.16 to 13.61, indicating that the company is effectively managing its accounts payable by paying its suppliers in a timely manner. A higher payables turnover ratio may suggest favorable credit terms or good relationships with suppliers.

The working capital turnover ratio has also been relatively stable, ranging from 5.87 to 10.05, indicating that Five Below Inc is efficiently utilizing its working capital to generate sales. A higher working capital turnover ratio generally indicates that a company is generating more revenue per dollar of working capital invested, which can be a positive sign of operational efficiency.

Overall, based on the analysis of these activity ratios, Five Below Inc appears to be effectively managing its inventory, accounts payable, and working capital, which are key indicators of operational efficiency in the retail industry.

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Average number of days

Five Below Inc's Days of Inventory on Hand (DOH) fluctuated over the past two years, with a peak of 94.50 days in October 2022 and a low of 55.46 days in January 2021. This ratio measures how efficiently the company manages its inventory levels by evaluating how many days it takes to sell its inventory. A higher DOH indicates slower inventory turnover, potentially signaling excess inventory or slow sales.

Unfortunately, there is no data provided for Days of Sales Outstanding (DSO) over the given period, limitinig our analysis of the company's ability to collect payment from customers. However, the company's Days of Payables trended downwards, reaching a low of 26.82 days in October 2021 before increasing to 41.53 days in October 2023. This ratio assesses how long it takes the company to pay its suppliers, with a lower number suggesting efficient payment practices.

Overall, further analysis of Days of Sales Outstanding is needed to fully evaluate the efficiency of Five Below Inc's revenue collection process. Additionally, monitoring the interplay between these activity ratios can provide insights into the company's operational efficiency and working capital management.

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Long-term

Five Below Inc's long-term activity ratios, fixed asset turnover and total asset turnover, provide insights into how efficiently the company is utilizing its assets to generate sales.

The fixed asset turnover has ranged between 3.11 and 4.28 over the past years, with the latest figure at 3.14 as of February 3, 2024. This ratio indicates that for every dollar invested in fixed assets, the company generates between $3.11 and $4.28 in sales. The decreasing trend in fixed asset turnover since the peak of 4.28 in February 2020 may suggest that the company is not utilizing its fixed assets as efficiently in recent periods.

On the other hand, the total asset turnover has fluctuated between 0.80 and 0.99 during the same period, with the latest value at 0.92 as of February 3, 2024. This ratio reflects the company's ability to generate sales from all its assets, including fixed and current assets. The trend in total asset turnover has been relatively stable, indicating that the company has maintained its efficiency in generating sales relative to its total assets.

Overall, the analysis of Five Below Inc's long-term activity ratios suggests that while the company has been consistently efficient in generating sales in relation to its total assets, there is a slight decline in the efficiency of utilizing fixed assets to achieve sales. This trend is worth monitoring to ensure that the company maintains or improves its asset utilization efficiency for sustained growth and profitability.