Nordstrom Inc (JWN)

Short-term

Turnover ratios

Nordstrom Inc's inventory turnover has shown some variability over the past few quarters, ranging from a low of 1.65 to a high of 6.27. This ratio indicates that the company is turning over its inventory approximately 2 to 6 times a year.

The receivables turnover ratio has also fluctuated but generally remained high, suggesting that Nordstrom is efficient in collecting its receivables, with values ranging from around 42 to 92.21. This indicates that the company is collecting its receivables approximately 42 to 92 times per year.

In terms of payables turnover, Nordstrom's ratio has shown some variability as well, ranging from 2.04 to 8.29. This suggests that the company is paying its suppliers approximately 2 to 8 times a year.

The working capital turnover appears to have significant fluctuations, with values ranging from a low of 70.91 to a high of 2,432. This can indicate varying levels of efficiency in utilizing working capital to generate sales.

Overall, the analysis of these activity ratios for Nordstrom Inc suggests a mixed performance in managing its inventory, receivables, payables, and working capital turnover, exhibiting some volatility and room for improvement in certain areas.

---

Average number of days

Days of Inventory on Hand (DOH) indicates the average number of days goods are held in inventory before being sold. Nordstrom's DOH has fluctuated over the past two years, ranging from a low of 58.26 days to a high of 221.63 days. While the company managed to reduce its inventory holding period significantly in recent periods, there is still room for improvement to optimize inventory turnover.

Days of Sales Outstanding (DSO) represents the average number of days it takes for Nordstrom to collect its accounts receivable. The DSO has been relatively stable, varying between 3.96 days and 8.35 days over the examined periods. Nordstrom's ability to collect payments from customers has been consistent, reflecting efficient credit management practices.

Number of Days of Payables reflects how long Nordstrom takes to pay its suppliers. The trend in payables days has shown variability, with a range from 44.02 days to 178.82 days. Nordstrom has exhibited flexibility in managing its payment terms with suppliers, which can impact its cash flow and relationships with vendors.

Overall, Nordstrom's activity ratios suggest a mixed performance in managing its inventory, receivables, and payables efficiently. Continued focus on optimizing inventory levels, maintaining consistent collections from customers, and effectively managing payment terms with suppliers will be crucial for improving operational efficiency and cash flow management.

---

Long-term

Nordstrom Inc's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into how efficiently the company is utilizing its assets to generate sales.

The fixed asset turnover ratio measures Nordstrom's ability to generate sales using its fixed assets. From February 2024 to May 2019, Nordstrom's fixed asset turnover ratio ranged from 2.87 to 4.74, with an average of approximately 3.80. This indicates that, on average, Nordstrom generated $3.80 in sales for every $1 of fixed assets invested over this period. The increasing trend in the ratio from October 2021 to February 2024 suggests improved efficiency in utilizing fixed assets to generate revenues.

The total asset turnover ratio reveals how efficiently Nordstrom is using all its assets to generate sales. Over the same period, the total asset turnover ratio ranged from 1.12 to 1.78, averaging approximately 1.56. This means that on average, Nordstrom generated $1.56 in sales for each $1 of total assets held. The variations in the ratio show fluctuations in the company's asset utilization efficiency.

Overall, Nordstrom's fixed asset turnover and total asset turnover ratios indicate that the company has been effectively utilizing its assets to generate sales, with improvements in fixed asset turnover seen in recent periods. However, it is essential for Nordstrom to continue monitoring and optimizing its asset utilization to sustain and enhance its operational efficiency.