Hershey Co (HSY)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	6.20	5.99	5.74	6.67	7.03	6.80	6.33	7.02	7.11	6.20	5.36	5.54	4.61	4.57	4.44	5.30	5.35	4.39	4.46	5.49
Receivables turnover	13.36	9.82	14.06	—	14.51	—	—	—	13.30	—	—	—	—	—	—	—	—	—	—	—
Payables turnover	7.65	7.44	7.84	7.83	8.50	8.80	8.72	8.78	10.15	9.47	9.22	9.10	7.67	7.43	8.36	8.29	7.92	7.68	8.91	8.67
Working capital turnover	—	43.59	69.39	—	—	—	—	—	—	10.53	13.69	7.73	7.50	8.21	11.55	—	73.74	—	—	—

Hershey Company's activity ratios provide insights into the efficiency of its operations in managing its assets and liabilities.

1. Inventory Turnover: This ratio indicates how effectively Hershey is managing its inventory. The trend shows a slight decrease in inventory turnover from Q1 to Q3 of 2023, followed by a small increase in Q4. The ratio fluctuated between 4.40 and 5.17 times during the period, implying that inventory was turned over between 4 to 5 times on average.

2. Receivables Turnover: This ratio reflects how quickly Hershey collects its accounts receivable. The company's receivables turnover ratio fluctuated significantly throughout the year. It peaked in Q2 and remained relatively high in Q3 of 2023. This indicates that Hershey was collecting its receivables more efficiently during these quarters.

3. Payables Turnover: The payables turnover ratio measures how quickly Hershey pays its suppliers. The trend shows relatively stable payables turnover ratios over the period, with slight fluctuations. The ratios ranged between 5.68 and 7.03, suggesting that Hershey was managing its payables effectively.

4. Working Capital Turnover: The data provided is incomplete, with figures missing for several quarters. However, the working capital turnover ratio can help assess how efficiently Hershey is utilizing its working capital to generate sales. The available data suggests a significant increase in Q2 of 2023 compared to previous quarters, indicating an improvement in working capital efficiency.

In conclusion, Hershey Company's activity ratios reflect mixed efficiency levels in managing inventory, receivables, payables, and working capital turnover over the analyzed period. Further analysis combined with industry benchmarks would provide a more thorough assessment of Hershey's operational performance.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	58.90	60.98	63.60	54.73	51.92	53.66	57.69	51.97	51.35	58.88	68.16	65.89	79.11	79.85	82.29	68.87	68.19	83.20	81.77	66.52
Days of sales outstanding (DSO)	days	27.32	37.18	25.96	—	25.16	—	—	—	27.43	—	—	—	—	—	—	—	—	—	—	—
Number of days of payables	days	47.71	49.09	46.56	46.59	42.95	41.47	41.83	41.58	35.96	38.53	39.57	40.09	47.59	49.12	43.64	44.02	46.07	47.53	40.95	42.09

Based on the provided data on Hershey Company's activity ratios, we can observe the following trends:

Days of Inventory on Hand (DOH):
- There is some fluctuation in the DOH ratio over the past eight quarters, ranging from a low of 70.57 days in Q1 2023 to a high of 83.03 days in Q2 2023.
- Generally, the company has maintained its inventory levels for approximately 70 to 80 days, with some quarters showing a slightly higher or lower level of inventory holding.
- Lower DOH values indicate that Hershey may be efficiently managing its inventory by selling products quickly or having a leaner inventory management system in place.

Days of Sales Outstanding (DSO):
- The DSO ratio also displays variability over the quarters, with values ranging from 24.56 days in Q2 2022 to 36.88 days in Q3 2023.
- A lower DSO implies that Hershey is collecting its accounts receivable faster, thus improving its cash flow position.
- Higher DSO values could suggest potential challenges in collecting payments, leading to increased working capital requirements.

Number of Days of Payables:
- The number of days of payables has been relatively stable, with values hovering around 50 to 60 days over the observed quarters.
- Hershey seems to have consistent payment terms with its suppliers, as indicated by the stable nature of this ratio.
- A longer payable period allows the company to hold onto cash longer, potentially improving liquidity.

Overall, by analyzing these activity ratios, we can infer that Hershey Company has been managing its inventory, receivables, and payables effectively, with some fluctuations in performance observed across different quarters. Monitoring these ratios can provide insights into the company's operational efficiency and working capital management strategies.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	3.40	3.51	3.56	3.76	3.73	3.81	3.74	3.60	3.45	3.71	3.70	3.65	3.57	3.68	3.67	3.72	3.71	3.76	3.73	3.72
Total asset turnover	0.92	0.93	0.93	0.96	0.94	0.92	0.92	0.88	0.86	0.93	0.97	0.93	0.89	0.87	0.89	0.90	0.98	0.93	1.01	1.00

The fixed asset turnover ratio for Hershey Company has shown a relatively stable trend over the past eight quarters, ranging from 3.37 to 3.85. This indicates that the company is able to generate sales efficiently from its investment in fixed assets, such as property, plant, and equipment.

On the other hand, the total asset turnover ratio has also displayed consistency over the same period, fluctuating between 0.88 and 0.97. This ratio reflects the company's ability to generate sales from all its assets, including both fixed and current assets.

Comparing the two ratios, it can be observed that Hershey Company is more efficient in generating sales from its fixed assets compared to its total assets. The relatively high fixed asset turnover ratio indicates that the company is effectively utilizing its fixed assets to drive revenue.

Overall, the stable and healthy levels of both fixed asset turnover and total asset turnover ratios suggest that Hershey Company is efficiently deploying its assets to generate sales, which is a positive indicator of operational efficiency and effective asset utilization.