Hormel Foods Corporation (HRL)

Short-term

Turnover ratios

Hormel Foods Corporation's activity ratios provide insights into the efficiency of its operations in managing inventory, receivables, payables, and working capital.

1. Inventory Turnover: The company has maintained a relatively stable inventory turnover ranging from 6.39 to 8.76 over the past two years. With an average of approximately 7.33 times per year, Hormel Foods effectively manages its inventory levels by replenishing stock almost every 50 days.

2. Receivables Turnover: Hormel Foods has shown an upward trend in receivables turnover, ranging from 11.31 to 17.88 over the same period. This indicates that the company is efficient in collecting revenue from customers, with an average of around 15.15 times per year, showing a collection cycle of about 24 days.

3. Payables Turnover: The data reveals varied payables turnover for Hormel Foods, ranging from 13.03 to 17.14. The rates have been relatively consistent, indicating the company's ability to manage its trade payables effectively, with an average of approximately 15.51 times per year, implying a payment cycle of around 24 days.

4. Working Capital Turnover: The working capital turnover ratio has fluctuated significantly from 4.21 to 12.98 over the past two years, with an average of approximately 7.06. This indicates that Hormel Foods efficiently uses its working capital to generate sales, with an average turnover period of about 52 days.

Overall, these activity ratios suggest that Hormel Foods Corporation effectively manages its operations, inventory, receivables, payables, and working capital to support its revenue generation and profitability.

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Average number of days

Days of inventory on hand (DOH) measures how many days a company takes to sell its inventory. Hormel Foods Corporation's DOH has been relatively stable over the period, ranging between 45.79 days and 57.42 days. A lower DOH is generally better as it indicates faster turnover of inventory.

Days of sales outstanding (DSO) reflects how long it takes for a company to collect revenues after a sale is made. Hormel's DSO has fluctuated between 20.42 days and 32.26 days. A lower DSO is favorable as it implies faster collection of receivables.

Number of days of payables shows how long a company takes to pay its suppliers. Hormel's payables days range from 22.40 days to 28.01 days. A higher number of days of payables can indicate that the company is effectively utilizing trade credit to manage its cash flow.

Overall, Hormel Foods Corporation's activity ratios suggest that the company is managing its inventory, accounts receivable, and accounts payable efficiently.

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Long-term

Hormel Foods Corporation's long-term activity ratios, specifically fixed asset turnover and total asset turnover, provide insight into the efficiency with which the company is utilizing its assets to generate revenue.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how well a company is generating sales from its fixed assets. A higher ratio indicates better efficiency in utilizing fixed assets to generate revenue.
- From October 2020 to October 2024, Hormel Foods Corporation's fixed asset turnover ratio has shown a slight fluctuation, ranging from 4.99 to 5.93. This indicates relatively stable efficiency in generating sales from its fixed assets over time.
- The highest fixed asset turnover ratio was recorded in October 2022 at 5.93, while the lowest was in July 2021 at 4.99. This variability may suggest changing production capacity or capital expenditure decisions impacting asset utilization.

2. Total Asset Turnover:
- The total asset turnover ratio reflects how well a company is using all its assets to generate sales. A higher ratio indicates better efficiency in generating sales from total assets.
- Hormel Foods Corporation's total asset turnover ratio has varied between 0.84 and 1.15 from January 2020 to October 2024. The company experienced fluctuations but maintained relatively stable efficiency in utilizing all assets to generate revenue.
- The highest total asset turnover ratio was in April 2020 at 1.15, while the lowest was in April 2021 at 0.84. This variability may be influenced by changes in sales volume, asset investments, or business strategies.

Overall, based on the trend in both fixed asset turnover and total asset turnover ratios, Hormel Foods Corporation has demonstrated consistent efficiency in generating revenue from its assets, maintaining stable performance over the analyzed periods.