Nordstrom Inc (JWN)

Short-term

Turnover ratios

Nordstrom Inc's inventory turnover has fluctuated over the past five years, ranging from 2.20 to 5.38. The current inventory turnover ratio of 2.83 indicates that the company is turning over its inventory approximately 2.83 times during the period. This suggests that Nordstrom's inventory management has been relatively stable, with a slight improvement compared to the previous year.

The receivables turnover ratio shows a declining trend from 86.73 in 2020 to 43.99 in 2024. This indicates that Nordstrom is collecting its receivables more slowly compared to the previous years. It may be worth investigating the reasons behind this decrease and implementing strategies to improve the collection process.

The payables turnover ratio has also fluctuated over the years, ranging from 2.24 to 6.55. The current ratio of 4.32 suggests that Nordstrom is able to pay off its suppliers approximately 4.32 times during the year. This indicates the company's ability to manage its payables efficiently, with a slight improvement compared to the previous year.

The working capital turnover ratio shows a significant increase from 70.91 in 2023 to 229.58 in 2024. This ratio indicates how effectively Nordstrom is using its working capital to generate sales. The sharp increase suggests that Nordstrom has significantly improved its working capital management efficiency in the current year.

Overall, Nordstrom's activity ratios provide insights into the company's efficiency in managing its inventory, receivables, payables, and working capital. It is crucial for the company to continue monitoring these ratios and making strategic decisions to optimize its operational performance.

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Average number of days

Days of Inventory on Hand (DOH) measures how quickly a company sells its inventory. Nordstrom's DOH has been fluctuating over the past five years, decreasing from 165.74 days in 2022 to 128.93 days in 2024. This indicates that Nordstrom has improved its inventory management efficiency over time.

Days of Sales Outstanding (DSO) indicates how long it takes for the company to collect payments from its customers. Nordstrom's DSO has also fluctuated, with a slight increase from 6.23 days in 2023 to 8.30 days in 2024. This could suggest that Nordstrom is taking slightly longer to collect payments from customers in the most recent year.

Number of Days of Payables represents how long a company takes to pay its suppliers. Nordstrom's Days of Payables has been somewhat inconsistent, with a significant decrease from 163.07 days in 2021 to 84.40 days in 2024. This reduction indicates that Nordstrom has been paying its suppliers more quickly in 2024 compared to previous years.

Overall, Nordstrom's activity ratios show some fluctuations over the past five years, with improvements in inventory management efficiency and payment to suppliers, but a slight increase in the time taken to collect payments from customers. These ratios can provide insights into Nordstrom's operational performance and efficiency in managing its working capital.

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Long-term

The fixed asset turnover ratio for Nordstrom Inc has been relatively stable over the past five years, averaging around 4.20. This indicates that the company generates approximately $4.20 in sales for every dollar invested in fixed assets. The consistent level of fixed asset turnover suggests that Nordstrom is effectively utilizing its fixed assets to generate revenue.

In terms of total asset turnover, Nordstrom's performance has also been steady, with an average ratio of approximately 1.60 over the same period. This shows that the company generates $1.60 in sales for every dollar of total assets it possesses. The improvement in total asset turnover from 2020 to 2022 indicates that Nordstrom has been more efficient in utilizing its total assets to generate revenue in recent years.

Overall, the long-term activity ratios suggest that Nordstrom Inc has been efficient in managing both its fixed and total assets to generate sales, which is a positive indicator of the company's operational efficiency and profitability.