Hewlett Packard Enterprise Co (HPE)

Activity ratios

Short-term

Turnover ratios

	Oct 31, 2024	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020
Inventory turnover	0.78	1.34	1.29	1.26	2.41
Receivables turnover	4.06	4.15	6.95	6.98	7.97
Payables turnover	0.55	0.87	0.77	0.81	1.20
Working capital turnover	4.03	—	—	—	—

Hewlett Packard Enterprise Co's inventory turnover has shown a declining trend over the past five years, dropping from 2.41 in 2020 to 0.78 in 2024. This indicates that the company is selling its inventory at a slower rate compared to previous years, which could potentially lead to excess inventory levels or inefficient inventory management.

On the other hand, the receivables turnover has been relatively stable, fluctuating between 4.06 and 7.97. This suggests that the company is efficient in collecting revenues from its customers, with a higher turnover ratio indicating quicker collection of accounts receivable.

In terms of payables turnover, Hewlett Packard Enterprise Co's ratio has also shown a decreasing trend, falling from 1.20 in 2020 to 0.55 in 2024. A lower payables turnover ratio could indicate that the company is taking longer to pay its suppliers, possibly due to liquidity issues or changes in payment terms.

Additionally, the working capital turnover ratio for 2024 stands at 4.03, indicating that the company generates $4.03 in revenue for every $1 of working capital invested. However, data for previous years is not provided for comparison.

Overall, the analysis of Hewlett Packard Enterprise Co's activity ratios suggests potential inefficiencies in inventory management and payment processes that may require further investigation and management attention to optimize the company's working capital efficiency.

Average number of days

		Oct 31, 2024	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020
Days of inventory on hand (DOH)	days	470.02	271.44	282.04	288.71	151.51
Days of sales outstanding (DSO)	days	89.90	88.00	52.53	52.27	45.80
Number of days of payables	days	665.85	420.44	476.37	448.27	305.00

Hewlett Packard Enterprise Co's activity ratios provide insights into the efficiency of the company's inventory management, accounts receivable collection, and accounts payable management over the past five years.

1. Days of Inventory on Hand (DOH): This ratio indicates the average number of days the company takes to sell its entire inventory. The trend shows an increasing DOH over the years, suggesting that Hewlett Packard Enterprise Co is taking longer to turn its inventory into sales. This could be a sign of potential issues such as slow-moving inventory or weak demand for products.

2. Days of Sales Outstanding (DSO): DSO measures the average number of days it takes for the company to collect its accounts receivable. The trend in this ratio has been fluctuating but generally increasing, indicating that the company is now taking more time to collect its outstanding receivables. This may imply challenges in collecting payments from customers promptly, leading to potential cash flow constraints.

3. Number of Days of Payables: This ratio reflects how long the company takes to pay its suppliers or trade payables. The trend in days of payables has been increasing consistently, indicating that Hewlett Packard Enterprise Co is taking longer to settle its payables. While lengthening payables may provide short-term cash flow benefits, it could strain supplier relationships if not managed effectively.

Overall, the trends observed in Hewlett Packard Enterprise Co's activity ratios suggest areas of concern in inventory turnover, accounts receivable collection, and accounts payable management. It is crucial for the company to address these issues to enhance operational efficiency and maintain healthy working capital levels.

Long-term

	Oct 31, 2024	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020
Fixed asset turnover	5.32	4.86	4.93	4.95	4.80
Total asset turnover	0.42	0.51	0.50	0.48	0.50

Hewlett Packard Enterprise Co's long-term activity ratios indicate the efficiency with which the company utilizes its assets to generate sales. The fixed asset turnover has shown a consistent improvement over the past five years, increasing from 4.80 in 2020 to 5.32 in 2024. This suggests that the company is generating more revenue per dollar of fixed assets, indicating increased efficiency in utilizing its long-term assets such as property, plant, and equipment.

On the other hand, the total asset turnover has fluctuated over the same period, with a peak of 0.51 in 2023 and a low of 0.42 in 2024. A lower total asset turnover indicates that the company generates less revenue relative to its total assets, which could signal inefficiencies in managing its current assets and liabilities.

Overall, while the fixed asset turnover portrays a positive trend in asset utilization efficiency, the total asset turnover suggests a need for the company to focus on optimizing the utilization of its total assets to enhance overall operational efficiency and profitability.