Five Below Inc (FIVE)

Short-term

Turnover ratios

Based on the provided data, we can analyze the activity ratios of Five Below Inc over several periods.

1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently a company manages its inventory. A higher turnover indicates that the company is selling its inventory more quickly.
- Five Below Inc's inventory turnover has fluctuated over the periods, ranging from 3.04 to 5.34. There is a general decreasing trend in inventory turnover, indicating a potential slowdown in inventory management efficiency.

2. Receivables Turnover:
- The receivables turnover ratio evaluates how efficiently a company collects its accounts receivable. A higher ratio suggests faster collection of receivables.
- Five Below Inc did not have available data for receivables turnover for the periods provided, which limits our ability to assess the efficiency of its accounts receivable management.

3. Payables Turnover:
- The payables turnover ratio measures how efficiently a company pays its suppliers. A higher ratio reflects that the company is managing its payables effectively.
- Five Below Inc's payables turnover data shows variability, with values ranging from 6.89 to 11.91. The absence of payables turnover data for some periods makes it challenging to draw definitive conclusions about the company's payables management.

4. Working Capital Turnover:
- The working capital turnover ratio indicates how effectively a company utilizes its working capital to generate sales. A higher turnover ratio suggests better utilization of working capital.
- Five Below Inc's working capital turnover ratio has shown fluctuations, ranging from 6.42 to 11.35. The company's performance in utilizing working capital to generate sales seems to vary across the periods analyzed.

In conclusion, the activity ratios of Five Below Inc demonstrate fluctuations and trends in inventory management efficiency, while limited data availability for receivables turnover and variability in payables turnover ratios pose challenges in fully assessing the company's operational effectiveness and financial performance.

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Average number of days

The Days of Inventory on Hand (DOH) ratio for Five Below Inc has seen fluctuations over the reported periods. The ratio ranged from a low of 68.33 days on January 31, 2022, to a high of 119.92 days on October 29, 2022. Generally, a lower DOH is preferable as it indicates that the company is efficiently managing its inventory levels.

The Days of Sales Outstanding (DSO) data is not available, which makes it challenging to assess the efficiency of the company in collecting its accounts receivable. Without this information, it is not possible to gauge how quickly the company is converting its credit sales into cash.

On the other hand, the Number of Days of Payables shows the number of days it takes for the company to pay its suppliers. The company has been managing its payables efficiently over the reported periods, with the number of days ranging from 30.66 days on February 3, 2024, to 52.98 days on October 28, 2023. A higher number of days in payables generally indicates that the company is taking longer to pay its suppliers, which could signify better cash flow management.

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Long-term

Five Below Inc's long-term activity ratios, specifically the Fixed Asset Turnover and Total Asset Turnover, provide insight into the company's efficiency in utilizing its assets to generate sales.

- Fixed Asset Turnover: This ratio indicates how efficiently the company is using its fixed assets to generate revenues. The trend for Five Below shows fluctuations over time. The ratio peaked at 4.05 in April 2022, indicating that the company generated $4.05 in sales for every $1 of fixed assets. However, it dropped to 1.17 in October 2023 before rebounding to 3.66 in February 2024. The lack of data beyond April 2024 hinders a complete trend analysis.

- Total Asset Turnover: This ratio measures how effectively the company is utilizing all its assets to generate sales. Five Below's Total Asset Turnover ratio shows a decreasing trend from January 2022 to October 2022, reaching a low of 0.83. However, there was a slight recovery in subsequent periods, with the ratio fluctuating between 0.81 and 1.09. The company's ability to generate sales from its total assets improved from the low in 2022 but remained somewhat volatile.

In conclusion, while the Fixed Asset Turnover and Total Asset Turnover ratios for Five Below Inc have shown variability over time, there is an overall trend of efficiency in asset utilization to drive sales. It is essential for the company to continue monitoring and managing these ratios to ensure optimal performance and sustainable growth.