Grocery Outlet Holding Corp (GO)

Short-term

Turnover ratios

Inventory turnover is a measure of how efficiently Grocery Outlet Holding Corp is managing its inventory. The ratio has been relatively stable over the past five years, ranging from 10.32 to 12.19, indicating that the company is effectively selling and replenishing its inventory. A higher inventory turnover ratio suggests that the company is selling its inventory quickly, which can help reduce storage and holding costs.

Receivables turnover reflects how quickly Grocery Outlet is collecting payments from its customers. The ratio has shown a decreasing trend over the years, from 295.46 in 2021 to 206.15 in 2023. This may indicate that the company is taking longer to collect payments from customers, which could potentially lead to cash flow challenges if not managed efficiently.

Payables turnover measures how quickly Grocery Outlet is paying its suppliers. The ratio has fluctuated over the years, ranging from 18.41 to 26.16. A higher payables turnover ratio indicates that the company is paying its bills quickly, which could imply strong supplier relationships or efficient cash management practices.

Working capital turnover shows how effectively Grocery Outlet is using its working capital to generate sales. The ratio has been volatile over the period, with a notable increase in 2021 and a subsequent decrease in 2023. A higher working capital turnover ratio suggests that the company is efficiently using its resources to generate revenue, while a lower ratio may indicate inefficiencies in working capital management.

Overall, the activity ratios for Grocery Outlet Holding Corp show varying trends over the years, highlighting the company's performance in managing inventory, collection of receivables, payment to suppliers, and utilization of working capital to generate sales.

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Average number of days

Activity ratios provide insight into how efficiently a company is managing its operations and utilizing its assets. Let's analyze Grocery Outlet Holding Corp's activity ratios based on the given data:

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows fluctuations over the years, ranging from 29.94 days in 2020 to 35.36 days in 2022.
- In 2023, the company held inventory for an average of 33.14 days, indicating a moderate level of inventory management efficiency.
- A lower DOH implies faster inventory turnover and better management of working capital, while a higher DOH could suggest excess inventory levels or slow-moving items.

2. Days of Sales Outstanding (DSO):
- DSO reflects the average number of days it takes for the company to collect its accounts receivable.
- Grocery Outlet demonstrated a decreasing trend in DSO from 1.43 days in 2019 to 1.24 days in 2021, but saw a slight increase in 2023 to 1.77 days.
- A lower DSO signifies efficient collections and strong cash flow management, while a higher DSO may indicate delays in receiving payments from customers.

3. Number of Days of Payables:
- The days of payables indicate the average number of days it takes for the company to pay its suppliers.
- Grocery Outlet experienced fluctuations in the number of days of payables, ranging from 13.95 days in 2020 to 19.82 days in 2023.
- A longer period of payables suggests that the company is taking longer to settle its payables, potentially improving cash flow but risking supplier relationships.

In conclusion, analyzing these activity ratios collectively provides insight into how effectively Grocery Outlet Holding Corp is managing its inventory, accounts receivable, and payables. Maintaining a balance between these operational aspects is crucial for optimizing working capital management and overall business performance.

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Long-term

The long-term activity ratios for Grocery Outlet Holding Corp indicate how efficiently the company is utilizing its assets to generate sales. The fixed asset turnover ratio has been relatively stable over the years, ranging from 6.14 to 7.19. This suggests that the company is generating sales efficiently from its fixed assets such as property, plant, and equipment.

On the other hand, the total asset turnover ratio has shown some fluctuations but has generally improved from 1.15 in 2019 to 1.33 in 2023. This indicates that the company is generating more sales relative to its total assets, including both fixed and current assets. Overall, the company appears to be effectively utilizing its assets to generate revenue, with particularly strong performance in terms of fixed asset turnover.