Home Depot Inc (HD)

Activity ratios

Short-term

Turnover ratios

	Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Nov 1, 2020	Aug 2, 2020	May 3, 2020	Feb 2, 2020	Nov 3, 2019	Aug 4, 2019	May 5, 2019
Inventory turnover	4.85	4.49	4.43	4.08	4.20	4.07	3.96	4.01	4.55	4.76	5.06	4.87	5.25	5.13	5.83	4.93	5.00	4.65	4.91	4.65
Receivables turnover	45.87	39.09	40.37	36.97	47.45	42.15	41.67	—	44.12	41.81	—	—	44.15	—	—	—	—	—	—	—
Payables turnover	10.13	8.92	8.51	8.20	9.14	8.43	7.19	6.59	7.45	7.32	7.47	6.44	7.52	6.42	6.73	7.35	9.33	7.91	7.62	6.99
Working capital turnover	19.67	21.62	20.37	22.32	16.81	16.73	30.40	43.84	417.56	41.45	90.49	48.51	24.87	13.79	16.66	28.53	76.81	68.95	57.87	124.59

Based on the activity ratios of Home Depot Inc provided in the table, we can derive various insights into the efficiency of the company's operations:

1. Inventory Turnover: Home Depot's inventory turnover has generally been stable over the periods analyzed, ranging from 3.96 to 5.83. This indicates that the company is effectively managing its inventory levels and turning over its inventory multiple times within a given period. A higher inventory turnover ratio suggests efficient inventory management and good sales performance.

2. Receivables Turnover: The receivables turnover ratio has fluctuated significantly, with values ranging from 36.97 to 47.45. A higher receivables turnover ratio implies that Home Depot is efficient in collecting its accounts receivable, converting credit sales into cash quickly. However, the unavailability of data for some periods makes it challenging to assess the trend accurately.

3. Payables Turnover: The payables turnover ratio has also varied over time, with values between 6.44 and 10.13. A higher payables turnover ratio indicates that Home Depot is paying its suppliers promptly, potentially benefiting from discounts and improving its relationships with suppliers. The fluctuations may reflect changes in payment terms or purchasing practices.

4. Working Capital Turnover: Home Depot's working capital turnover has shown significant variability, ranging from 13.79 to 417.56. The extremely high ratio in some periods may indicate a temporary or abnormal situation, possibly due to seasonal factors or specific business events. A high working capital turnover ratio suggests efficient utilization of working capital to generate sales.

Overall, analyzing these activity ratios helps assess Home Depot's operational efficiency in managing inventory, collecting receivables, paying suppliers, and utilizing working capital to drive sales. It is essential for investors and stakeholders to interpret these ratios in conjunction with other financial metrics and qualitative factors to gain a comprehensive understanding of the company's performance and prospects.

Average number of days

		Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Nov 1, 2020	Aug 2, 2020	May 3, 2020	Feb 2, 2020	Nov 3, 2019	Aug 4, 2019	May 5, 2019
Days of inventory on hand (DOH)	days	75.28	81.34	82.43	89.42	86.82	89.77	92.28	91.12	80.29	76.74	72.10	74.96	69.55	71.15	62.66	74.01	73.00	78.48	74.33	78.47
Days of sales outstanding (DSO)	days	7.96	9.34	9.04	9.87	7.69	8.66	8.76	—	8.27	8.73	—	—	8.27	—	—	—	—	—	—	—
Number of days of payables	days	36.02	40.94	42.89	44.51	39.92	43.29	50.75	55.35	48.98	49.87	48.87	56.65	48.55	56.81	54.27	49.65	39.12	46.16	47.87	52.22

Days of Inventory on Hand (DOH) for Home Depot Inc have been fluctuating over the past few quarters, ranging from a low of 62.66 days to a high of 92.28 days. This indicates variability in the company's efficiency in managing its inventory levels. A lower DOH is typically better as it suggests faster inventory turnover and less capital tied up in inventory.

Days of Sales Outstanding (DSO) have also shown variability, with values ranging from 7.69 days to 9.87 days. A lower DSO is preferable as it indicates faster collection of accounts receivable, contributing to better cash flow management. However, missing data entries indicate a lack of consistency in tracking this ratio.

The Number of Days of Payables has ranged from 36.02 days to 56.81 days, indicating the time it takes for Home Depot to pay its suppliers. A longer payables period can be beneficial for cash flow management, as it allows the company to hold onto cash longer before paying its obligations. However, an excessively long payables period may strain relationships with suppliers.

Overall, fluctuations in these activity ratios suggest some inconsistency in Home Depot's operational efficiency and working capital management. It is important for the company to strive for a balance in these ratios to optimize inventory levels, accounts receivable collection, and supplier payments for sustainable financial performance.

Long-term

	Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Nov 1, 2020	Aug 2, 2020	May 3, 2020	Feb 2, 2020	Nov 3, 2019	Aug 4, 2019	May 5, 2019
Fixed asset turnover	5.84	5.97	5.98	6.07	6.14	6.23	6.15	6.06	6.00	5.92	5.83	5.73	5.35	5.27	5.10	4.94	4.84	4.94	4.91	4.92
Total asset turnover	1.99	2.03	2.03	2.04	2.06	2.05	2.05	1.99	2.10	2.02	2.04	1.95	1.87	1.88	1.88	1.91	2.15	2.12	2.12	2.13

The long-term activity ratios of Home Depot Inc, specifically the fixed asset turnover and total asset turnover, provide insights into the efficiency of the company in managing its assets over time.

Fixed asset turnover measures how well a company generates sales from its fixed assets. Home Depot Inc's fixed asset turnover has been relatively stable over the periods shown, ranging from 4.84 to 6.23. This indicates that the company has been effectively utilizing its fixed assets to generate revenue, with higher values suggesting better efficiency in generating sales from its fixed asset base.

Total asset turnover, on the other hand, reflects how efficiently a company is utilizing its total assets to generate revenue. Home Depot Inc's total asset turnover ranges from 1.87 to 2.15, indicating a consistent ability to generate sales relative to its total asset base. Higher values suggest that the company is effectively generating revenue from its total assets.

Overall, the stable and relatively high values of both fixed asset turnover and total asset turnover for Home Depot Inc indicate efficient asset management and a strong ability to generate revenue from its asset base over the periods analyzed. This reflects positively on the company's operational efficiency and effectiveness in utilizing its assets to drive sales and profitability.