Kontoor Brands Inc (KTB)

Short-term

Turnover ratios

Kontoor Brands Inc's inventory turnover has exhibited some fluctuations over the past few years, ranging from a low of 3.32 times in September 2022 to a high of 6.05 times in December 2021. Generally, an increasing trend is observed from 2022 to 2024, suggesting that the company is managing its inventory more efficiently. However, the current ratio of 4.89 times as of September 30, 2024, is lower than previous periods, which may indicate a slower inventory turnover rate.

In terms of receivables turnover, Kontoor Brands Inc has maintained a relatively stable performance, with turnover ratios ranging from 8.40 to 13.98 times during the period under review. The company's receivables turnover ratio peaked at 13.98 times in June 2022, indicating that it was able to collect its receivables almost 14 times over the year. This stable performance in receivables turnover reflects effective management of credit sales and collection efforts.

The payables turnover ratio of Kontoor Brands Inc has shown some fluctuation, ranging from a low of 7.36 times in September 2022 to a high of 19.07 times in June 2020. A decreasing trend is observed from 2022 to 2024, suggesting that the company is taking longer to pay its suppliers. The payables turnover ratio of 11.19 times as of September 30, 2024, is lower compared to previous periods, indicating a possible extension of payment terms to suppliers.

Regarding the working capital turnover, Kontoor Brands Inc's performance varies from a high of 5.27 times in June 2021 to a low of 3.81 times in March 2024. The decrease in the working capital turnover ratio over the years may suggest that the company is less effective in generating revenue from its working capital. This indicates that the company may need to reevaluate its working capital management strategies to improve efficiency and profitability.

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Average number of days

Kontoor Brands Inc's activity ratios provide insight into how efficiently the company manages its inventory, collects receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH):
- The average number of days Kontoor Brands holds inventory decreased from 79.21 days in March 2020 to 74.58 days in September 2024, showing an initial increase before a decline.
- A higher DOH could indicate slow-moving inventory or overstocking, while a lower DOH suggests efficient inventory management.

2. Days of Sales Outstanding (DSO):
- The number of days it takes for Kontoor Brands to collect receivables fluctuated over the years, with a decrease from 32.54 days in March 2020 to 29.40 days in June 2024.
- A shorter DSO indicates faster collection of payments from customers, improving the company's cash flow and liquidity.

3. Number of Days of Payables:
- Kontoor Brands' average number of days taken to pay its suppliers increased from 24.30 days in March 2020 to 32.62 days in December 2024, with fluctuations in between.
- A longer payable period allows the company to hold onto cash for a longer period, but it could strain relationships with suppliers if prolonged excessively.

Overall, Kontoor Brands Inc's activity ratios demonstrate varying levels of efficiency in managing inventory, collecting receivables, and paying suppliers over the years. Monitoring and improving these ratios can help enhance operational effectiveness and financial performance in the long run.

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Long-term

Based on the provided data for Kontoor Brands Inc, the Fixed Asset Turnover ratio has generally shown an increasing trend over the years, indicating that the company is generating more sales revenue per dollar of fixed assets invested. This implies efficient utilization of the company's fixed assets to generate sales.

On the other hand, the Total Asset Turnover ratio has displayed some fluctuation but has generally remained relatively stable. This ratio measures how efficiently the company is using its total assets to generate sales. The trend suggests that Kontoor Brands Inc has been able to generate a consistent level of sales relative to its total asset base.

Overall, the trends in both ratios suggest that Kontoor Brands Inc has been effectively managing and utilizing its assets to generate sales revenue efficiently over the years, which is a positive sign for the company's long-term operational performance. It indicates that the company is making efficient use of its assets to generate revenue and is effectively managing its asset turnover ratios.