Hewlett Packard Enterprise Co (HPE)

Activity ratios

Short-term

Turnover ratios

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019
Inventory turnover	1.34	1.29	1.26	2.41	2.70
Receivables turnover	4.15	6.95	6.98	7.97	8.35
Payables turnover	0.87	0.77	0.81	1.20	1.15
Working capital turnover	—	—	—	—	—

The activity ratios of Hewlett Packard Enterprise Co indicate the efficiency with which the company manages its inventory, receivables, payables, and working capital.

The inventory turnover ratio has shown a fluctuating trend over the last five years, with a decrease in 2022 and a subsequent increase in 2023. The company's ability to turn over its inventory improved in 2023 compared to the previous year, but it is still lower than the levels seen in 2019 and 2020.

The receivables turnover ratio has generally been increasing over the past five years, indicating that the company has been more efficient at collecting payments from its customers. This trend suggests an improvement in the management of accounts receivable.

The payables turnover ratio has also exhibited an increasing trend, indicating that the company is taking longer to pay its suppliers. This may be indicative of a more lenient payment policy with suppliers.

The working capital turnover ratio has not been provided for the years 2021 and earlier, but it shows a significant decrease in 2020 and 2019. This suggests a reduction in the company's efficiency in generating revenue from its working capital.

Overall, while the company has shown improvements in managing its receivables and payables, the inventory turnover has been relatively low, and there has been a decrease in working capital efficiency in recent years. These trends may warrant further investigation into the company's operational and supply chain management.

Average number of days

		Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019
Days of inventory on hand (DOH)	days	271.44	282.04	288.71	151.51	135.25
Days of sales outstanding (DSO)	days	88.00	52.53	52.27	45.80	43.71
Number of days of payables	days	420.44	476.37	448.27	305.00	317.01

To analyze Hewlett Packard Enterprise Co's activity ratios, we will focus on the days of inventory on hand (DOH), days of sales outstanding (DSO), and the number of days of payables. These ratios provide insights into the management of inventory, sales collection, and payment to suppliers.

The days of inventory on hand (DOH) measure the average number of days it takes for the company to sell its inventory. In 2023, the DOH stood at 90.83 days, showing a decrease from the previous year but still higher than in 2020 and 2019. This indicates that the company is taking longer to sell its inventory compared to the previous year, which may tie up more resources.

The days of sales outstanding (DSO) represent the average number of days it takes to collect on sales. The DSO for 2023 decreased to 43.61 days from 52.53 days in 2022. This suggests an improved efficiency in collecting receivables, which is a positive sign for cash flow and liquidity.

The number of days of payables reflects the average number of days it takes the company to pay its suppliers. In 2023, the number of days of payables decreased to 140.69 days from 170.33 days in 2022. This implies that the company is taking more time to pay its suppliers, which may have implications for relationships with vendors and potential cash flow advantages.

In summary, while Hewlett Packard Enterprise Co has shown improvement in collecting receivables and managing payables, there has been an increase in the days of inventory on hand, indicating potential inefficiencies in the management of inventory. It is crucial for the company to address this and strive for a balance in activity ratios to enhance overall operational effectiveness.

Long-term

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019
Fixed asset turnover	4.86	4.93	4.95	4.80	4.81
Total asset turnover	0.51	0.50	0.48	0.50	0.56

The long-term activity ratios of Hewlett Packard Enterprise Co show its efficiency in utilizing fixed assets and total assets to generate sales over the past five years. The fixed asset turnover has remained relatively stable, fluctuating between 4.80 and 4.95, indicating that the company has been consistent in generating sales from its fixed assets. This suggests that Hewlett Packard Enterprise Co efficiently utilizes its long-term assets to generate revenue.

On the other hand, the total asset turnover ratio has shown some variation, decreasing from 0.56 in 2019 to 0.48 in 2021, before increasing to 0.51 in 2023. This suggests that the company's overall efficiency in generating sales from all its assets has experienced some fluctuations over the period. The decrease in 2021 may indicate a temporary inefficiency in utilizing total assets to generate sales, which was subsequently improved in 2023.

Overall, the long-term activity ratios indicate that Hewlett Packard Enterprise Co has been effectively utilizing its fixed assets to generate sales, while the variability in the total asset turnover ratio suggests some fluctuations in the company's efficiency in utilizing all its assets to drive revenue.