Foot Locker Inc (FL)

Short-term

Turnover ratios

Foot Locker Inc's inventory turnover has shown volatility over the past five years, ranging from a low of 4.95 to a high of 7.83. This ratio measures how many times the company has sold and replaced its inventory during the year. A higher turnover indicates that the company's inventory is efficiently managed.

The receivables turnover ratio has also fluctuated, with a peak of 80.02 in 2020 and a low of 50.99 in 2024. This ratio reflects how quickly the company collects cash from its customers. A higher turnover suggests that the company is effective in collecting payments.

In terms of payables turnover, Foot Locker's performance has varied, with the ratio ranging from 13.59 to 22.04 over the years. This ratio assesses the speed at which the company pays its suppliers. A lower turnover may indicate longer payment cycles or good credit terms with suppliers.

The working capital turnover ratio has demonstrated inconsistency, from a low of 6.33 in 2021 to a high of 14.25 in 2022. This ratio measures the efficiency of a company in generating sales revenue relative to its working capital. A higher turnover implies that the company is effectively utilizing its working capital to generate sales.

Overall, Foot Locker Inc's activity ratios reflect fluctuations in its operational efficiency and management of inventory, receivables, payables, and working capital over the years analyzed.

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Average number of days

Days of Inventory on Hand (DOH): The trend in Foot Locker Inc's DOH ratio has varied over the past five years. In the most recent fiscal year, the company held inventory for an average of 68.56 days, which was a decrease from the previous year. A higher DOH ratio indicates that the company is holding onto inventory for a longer period, which could tie up capital and increase storage costs. The decrease in DOH from the prior year could suggest more efficient inventory management.

Days of Sales Outstanding (DSO): Foot Locker Inc's DSO ratio indicates the average number of days it takes for the company to collect its accounts receivable. The trend in DSO has shown fluctuations over the last five years. In the latest year, the company took an average of 7.16 days to collect its sales, which was slightly higher compared to the prior year. A lower DSO ratio is generally favorable as it signifies faster collection of receivables, improving cash flow and liquidity.

Number of Days of Payables: The number of days of payables metric shows how long it takes for Foot Locker Inc to pay its suppliers. Over the past five years, the trend in this ratio has been inconsistent. In the most recent year, the company took an average of 16.63 days to pay its suppliers. A lower number of days of payables suggests that the company is paying its suppliers more quickly, potentially indicating strong relationships with suppliers or early payment discounts. It is essential to strike a balance between managing payables efficiently and maintaining positive relationships with suppliers.

Overall, analyzing these activity ratios provides insights into Foot Locker Inc's efficiency in managing inventory, collecting receivables, and paying suppliers. Monitoring these ratios over time can help assess the company's operational effectiveness and identify areas for improvement.

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Long-term

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate sales. In the case of Foot Locker Inc, the trend in fixed asset turnover has been decreasing over the past five years, from 9.71 in Feb 2020 to 8.77 in Feb 2024. This suggests that Foot Locker's fixed assets are generating less revenue relative to previous years.

On the other hand, the total asset turnover ratio reflects how effectively a company is using all its assets to generate sales. Foot Locker's total asset turnover has fluctuated over the same period, from 1.21 in Feb 2020 to 1.19 in Feb 2024. This indicates that the company's overall asset utilization has been relatively stable, with a slight decrease in the most recent year.

Overall, while Foot Locker's fixed asset turnover has shown a declining trend, the total asset turnover has remained relatively steady, indicating that the company may need to focus on improving the efficiency of its fixed asset utilization to drive higher sales in the future.