Floor & Decor Holdings Inc (FND)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.98 | 3.19 | 3.27 | 3.62 | 3.48 |
| Receivables turnover | 158.12 | 581.03 | 978.41 | — | 710.97 |
| Payables turnover | 6.48 | 6.98 | 4.98 | 5.67 | 5.50 |
| Working capital turnover | 26.77 | 9.44 | 14.22 | 7.09 | 13.69 |
Inventory turnover for Floor & Decor Holdings Inc has been relatively stable over the past five years, ranging from 3.19 to 3.98. This indicates that the company is efficient in managing its inventory levels and converting them into sales. An increasing inventory turnover ratio suggests better liquidity and faster inventory movement.
Receivables turnover has shown significant fluctuations, with a high of 978.41 in 2021 and a considerable decrease to 158.12 in 2023. A high receivables turnover ratio indicates that the company is efficient in collecting payments from its customers. The sharp decline in 2023 may indicate changes in the company's credit policies or clientele.
Payables turnover has also exhibited variability, ranging from 4.98 to 6.98 over the five-year period. A higher payables turnover ratio suggests the company takes less time to pay its suppliers, potentially benefiting from discounts or favorable credit terms. The fluctuations in this ratio could indicate changes in payment policies or supplier relationships.
Working capital turnover has shown an increasing trend over the years, reaching 26.77 in 2023. A higher working capital turnover ratio signifies that the company is effectively using its working capital to generate sales. This improvement indicates enhanced efficiency in utilizing the company's current assets to generate revenue.
In conclusion, Floor & Decor Holdings Inc has demonstrated strong inventory management and working capital utilization. However, the significant fluctuations in receivables turnover and payables turnover ratios suggest potential changes in the company's credit and payment practices that could affect its liquidity and cash flow management.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 91.75 | 114.45 | 111.56 | 100.81 | 104.83 |
| Days of sales outstanding (DSO) | days | 2.31 | 0.63 | 0.37 | — | 0.51 |
| Number of days of payables | days | 56.34 | 52.33 | 73.25 | 64.42 | 66.38 |
Floor & Decor Holdings Inc's days of inventory on hand (DOH) has decreased from 114.45 days in 2022 to 91.75 days in 2023, indicating that the company is managing its inventory more efficiently. However, this ratio has fluctuated over the years, with a peak in 2020 at 100.81 days. The decreasing trend in DOH is a positive signal as it suggests that the company is selling its inventory faster.
Days of sales outstanding (DSO) have also shown variation, with a significant increase from 0.63 days in 2022 to 2.31 days in 2023. This increase suggests that the company is taking longer to collect its accounts receivable, which could impact its cash flow. It is important for Floor & Decor to monitor and improve its collection processes to reduce DSO.
The number of days of payables for Floor & Decor has fluctuated over the years, with a slight increase from 52.33 days in 2022 to 56.34 days in 2023. This indicates that the company is taking longer to pay its suppliers. While extending payables can provide short-term cash flow benefits, it is essential for the company to maintain favorable relationships with its suppliers.
Overall, monitoring and managing these activity ratios are crucial for Floor & Decor Holdings Inc to optimize its working capital management and improve its overall financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.70 | 3.38 | 3.69 | 4.18 | 4.47 |
| Total asset turnover | 0.95 | 0.98 | 0.92 | 0.84 | 0.88 |
Floor & Decor Holdings Inc has shown fluctuations in its long-term activity ratios over the past five years. The fixed asset turnover ratio has gradually decreased from 4.47 in 2019 to 2.70 in 2023. This indicates that the company generated $2.70 in sales for every dollar invested in fixed assets in 2023, down from $4.47 in 2019. The decreasing trend suggests that Floor & Decor's fixed assets are becoming less efficient in generating sales over time.
On the other hand, the total asset turnover ratio has also varied, with a range from 0.84 in 2020 to 0.98 in 2022. In 2023, the ratio stands at 0.95. This implies that the company generated $0.95 in sales for every dollar invested in total assets in 2023. The fluctuations in total asset turnover could indicate changes in the company's asset utilization and efficiency in generating revenue.
Overall, the declining fixed asset turnover ratio and the fluctuating total asset turnover ratio suggest that Floor & Decor Holdings Inc may be facing challenges in efficiently utilizing its assets to generate sales. Further analysis and comparison with industry peers can provide additional insights into the company's operational efficiency and long-term asset management strategies.