Hormel Foods Corporation (HRL)

Short-term

Turnover ratios

Hormel Foods Corporation's activity ratios provide insights into the efficiency of the company's operations:

1. Inventory Turnover: The company's inventory turnover ratio has been relatively stable over the periods analyzed, ranging from 5.86 to 6.87. This indicates that Hormel Foods is efficient in managing its inventory levels and turning over its inventory into sales multiple times during the year.

2. Receivables Turnover: Hormel Foods' receivables turnover ratio shows variations in the periods where data is available, with values ranging from 13.62 to 16.45. A higher receivables turnover ratio suggests that the company is efficient in collecting cash from its credit sales.

3. Payables Turnover: The payables turnover ratio for Hormel Foods was not available in most periods. However, in the periods where data is provided, the company had a payables turnover ratio ranging from 13.20 to 15.27. A higher payables turnover indicates that the company is effectively managing its accounts payable and settling its obligations in a timely manner.

4. Working Capital Turnover: The working capital turnover ratio measures how effectively a company is using its working capital to generate sales. Hormel Foods' working capital turnover ratio varied significantly across the periods, ranging from 5.77 to 12.69. Higher values indicate that the company is efficient in utilizing its working capital to support its operations and generate revenue.

Overall, the activity ratios suggest that Hormel Foods Corporation is effectively managing its inventory, receivables, payables, and working capital to support its business operations and drive revenue growth.

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Average number of days

Based on the provided data for Hormel Foods Corporation, we can analyze the activity ratios as follows:

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, a company holds its inventory before selling it. For Hormel Foods Corporation:
- The DOH ranged from a low of 53.11 days on January 31, 2024, to a high of 62.26 days on July 31, 2023, over the analyzed period.
- Overall, there is some fluctuation in the DOH, indicating variations in the efficiency of managing inventory levels.

2. Days of Sales Outstanding (DSO):
- The DSO represents the average number of days it takes for a company to collect revenue after a sale is made. It reflects the efficiency of the company's credit and collection policies. For Hormel Foods Corporation:
- DSO ranged from a low of 22.19 days on April 28, 2024, to a high of 26.81 days on October 27, 2024, during the period analyzed.
- Notably, there are periods where DSO data are not available, which may indicate information gaps or specific reporting practices.

3. Number of Days of Payables:
- This ratio shows the average number of days it takes a company to pay its suppliers. Lower days of payables suggest the company is paying its suppliers more quickly. For Hormel Foods Corporation:
- The number of days of payables ranged from 23.90 days on April 28, 2024, to 27.65 days on October 30, 2022.
- Similar to DSO, there are periods where data for days of payables are not provided, possibly due to reporting practices or data availability.

In summary, the analysis of Hormel Foods Corporation's activity ratios reveals fluctuations in inventory management efficiency, collection of receivables, and payment to suppliers over the analyzed period. These ratios provide insight into the company's operational effectiveness and financial performance in managing its working capital components.

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Long-term

The fixed asset turnover ratio measures how efficiently a company is generating sales from its investments in fixed assets. In the case of Hormel Foods Corporation, the fixed asset turnover ratio has been relatively stable around 5.5 to 6 times over the past few years. The sudden spike in the ratio to 41.46 and 44.41 in January and April of 2023 respectively may indicate a potential anomaly or irregularity in the financial data.

On the other hand, the total asset turnover ratio reflects how well a company is using its total assets to generate revenue. Hormel Foods' total asset turnover ratio has also been consistent, ranging from 0.85 to 0.95. The slight fluctuations in the ratio suggest that the company is effectively utilizing its total assets to generate sales, with a slight decrease observed towards the end of the data set.

Overall, based on the long-term activity ratios, Hormel Foods Corporation appears to be efficiently utilizing both its fixed assets and total assets to generate revenue, although some irregularities in the data may warrant further investigation to ensure the accuracy of the financial ratios.