Hormel Foods Corporation (HRL)
Working capital turnover
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 12,036,600 | 12,389,600 | 11,339,200 | 9,585,600 | 9,496,530 |
| Total current assets | US$ in thousands | 3,297,250 | 3,637,120 | 2,947,820 | 3,579,060 | 2,361,410 |
| Total current liabilities | US$ in thousands | 2,311,780 | 1,473,270 | 1,415,650 | 1,503,960 | 1,105,050 |
| Working capital turnover | 12.21 | 5.73 | 7.40 | 4.62 | 7.56 |
October 29, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $12,036,600K ÷ ($3,297,250K – $2,311,780K)
= 12.21
Working capital turnover is a financial ratio that measures how efficiently a company is using its working capital to generate sales revenue. A higher working capital turnover indicates better efficiency in utilizing its current assets and liabilities.
Based on the data provided, Hormel Foods Corp.'s working capital turnover has fluctuated over the past five years. In 2023, the working capital turnover ratio was 12.29, representing a significant improvement from the previous year. This suggests that the company was able to generate 12.29 times its sales revenue using its working capital, signifying a substantial increase in operational efficiency.
In 2022, the working capital turnover ratio was 5.76, indicating a decrease from the previous year. This reduction might be attributed to a change in the company's operational and financial activities or management of its working capital.
In 2021, the ratio improved to 7.43, indicating a more efficient utilization of working capital compared to 2020, when the ratio was 4.63. This improvement suggests that the company was able to generate more sales revenue relative to its investment in working capital.
In 2019, the working capital turnover was 7.56, showing strong efficiency in utilizing its working capital to generate sales revenue.
Overall, the fluctuation in Hormel Foods Corp.'s working capital turnover ratio over the past five years indicates varying levels of efficiency in managing its working capital to drive sales. It is important for the company to analyze the factors contributing to these fluctuations and continue to focus on optimizing its working capital management to ensure sustainable operational efficiency and profitability.