Hormel Foods Corporation (HRL)

Short-term

Turnover ratios

Hormel Foods Corporation's inventory turnover has shown a consistent improvement over the years, increasing from 6.00 in October 2022 to 6.28 in October 2024. This indicates that the company is managing its inventory more efficiently, with products being sold and replenished at a faster rate.

The receivables turnover ratio, which was not available for October 31, 2022, improved significantly from 14.60 in October 29, 2023 to 13.73 in October 27, 2024. This suggests that the company is collecting its accounts receivable more effectively, resulting in faster cash inflows from sales.

Similarly, the payables turnover ratio, also unavailable for October 31, 2022, increased from 14.40 in October 29, 2023 to 14.86 in October 27, 2024. This implies that Hormel Foods is managing its payments to suppliers more efficiently, possibly negotiating better terms or settling invoices promptly.

The working capital turnover ratio, which measures the efficiency of utilizing working capital to generate sales, fluctuated over the years but remained relatively stable, indicating that the company is effectively using its working capital to support its operations and sales growth.

Overall, the activity ratios reflect a positive trend in the operational efficiency of Hormel Foods Corporation, with improvements in inventory management, receivables and payables turnover, and effective utilization of working capital to drive sales.

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Average number of days

Hormel Foods Corporation's activity ratios indicate the efficiency of its operations in managing inventory, collecting receivables, and paying suppliers.

1. Days of Inventory on Hand (DOH):
- Over the period analyzed, Hormel Foods has shown a trend of decreasing days of inventory on hand from 60.85 days on October 31, 2022, to 58.12 days on October 31, 2024.
- This decreasing trend suggests that the company has been more efficient in managing its inventory over time, possibly through better inventory control and demand forecasting.

2. Days of Sales Outstanding (DSO):
- Hormel Foods had days of sales outstanding of 25.01 days on October 29, 2023, and 26.59 days on October 27, 2024.
- The DSO ratios show how quickly the company is collecting receivables from its customers. A lower DSO indicates faster collection, which is generally advantageous as it helps improve cash flow.

3. Number of Days of Payables:
- The number of days of payables for Hormel Foods was 25.35 days on October 29, 2023, and 24.57 days on October 27, 2024.
- A lower number of days of payables indicates that the company is taking fewer days to pay its suppliers, which could potentially strain cash flow. However, it may also indicate good relationships with suppliers, allowing for more favorable credit terms.

Overall, the analysis of these activity ratios suggests that Hormel Foods has been improving its operational efficiency in managing inventory, collecting receivables, and paying suppliers over the period under review.

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Long-term

Hormel Foods Corporation's fixed asset turnover ratio has been relatively stable over the years, with values ranging from 5.27 to 5.82. This indicates that the company generated between $5.27 to $5.82 in sales for every dollar invested in fixed assets during the respective periods.

In terms of total asset turnover, Hormel Foods Corporation's performance has been consistent, with values ranging from 0.89 to 0.94. This suggests that the company generated between $0.89 to $0.94 in sales for every dollar of total assets it held during the specified periods.

Overall, the company's strong fixed asset turnover and stable total asset turnover ratios indicate efficient utilization of assets to generate sales revenue, demonstrating effective asset management and operational efficiency.