Kroger Company (KR)

Short-term

Turnover ratios

The inventory turnover ratio measures how efficiently Kroger Company manages its inventory. The trend shows an improvement over the periods analyzed, with the ratio ranging from 3.34 to 16.60. This indicates that the company is selling its inventory more frequently over time, which is generally a positive sign as it implies faster inventory turnover. However, the ratio fluctuates, suggesting potential issues with inventory management in certain periods.

The receivables turnover ratio reflects how effectively Kroger collects payments from its customers. The trend is relatively stable, with the ratio fluctuating between 66.12 and 83.98. A higher ratio indicates that the company is collecting receivables more quickly. The consistent performance in this ratio suggests that Kroger has efficient credit and collection policies, leading to a steady turnover of receivables.

The payables turnover ratio represents how quickly Kroger pays its suppliers. The data shows some variability in this ratio, with values ranging from 10.82 to 15.29. A higher ratio indicates that the company is paying its suppliers more quickly. The fluctuations in the ratio over time may suggest changes in the company's payment practices or relationships with suppliers.

The working capital turnover ratio, based on the provided table, does not have available data for analysis. This ratio typically measures how effectively a company utilizes its working capital to generate sales. Absence of data makes it challenging to assess Kroger's efficiency in this aspect over the periods analyzed.

---

Average number of days

Days of inventory on hand (DOH) for Kroger Company have fluctuated over the past few reporting periods, with a notable decrease to 21.99 days as of February 3, 2024, indicating improved inventory management efficiency. This suggests that Kroger is turning over its inventory more quickly, which can lead to reduced carrying costs and potential for higher profitability.

Days of sales outstanding (DSO) have also shown variability but generally reflect a stable collection period for accounts receivable. As of February 3, 2024, the DSO stands at 5.21 days, indicating that Kroger is efficient in collecting payments from customers.

The number of days of payables for Kroger has fluctuated as well, with the most recent data showing a slight increase to 32.12 days as of February 3, 2024. This suggests that Kroger takes slightly longer to pay its suppliers, which can be beneficial in managing cash flow and liquidity.

Overall, the activity ratios for Kroger demonstrate a balanced approach to managing its working capital components, with a focus on optimizing inventory turnover, efficient accounts receivable collection, and strategic management of accounts payable.

---

Long-term

The fixed asset turnover ratio for Kroger Company has shown some fluctuations over the periods analyzed, ranging from 5.78 to 6.51. This ratio indicates that Kroger is generating sales revenue efficiently from its fixed assets, with a higher ratio suggestive of better asset utilization. However, it's important to note that a very high fixed asset turnover may also indicate aggressive depreciation policies or aging fixed assets.

On the other hand, the total asset turnover ratio has also fluctuated but generally remained within a narrower range of 2.63 to 3.17. This ratio reflects Kroger's ability to generate sales from all its assets, including both fixed and current assets. A higher total asset turnover ratio suggests that the company is efficient in utilizing all its assets to generate sales.

Overall, a high fixed asset turnover and total asset turnover ratios indicate that Kroger is effectively utilizing its assets to generate sales revenue. However, it's essential to analyze these ratios in conjunction with other financial metrics to gain a more comprehensive understanding of Kroger's long-term activity efficiency.