Kontoor Brands Inc (KTB)

Short-term

Turnover ratios

The activity ratios for Kontoor Brands Inc indicate the efficiency of the company in managing its inventory, accounts receivable, accounts payable, and working capital.

1. Inventory turnover: The inventory turnover ratio has fluctuated over the periods, indicating varying levels of efficiency in managing inventory. The company's ability to turn over its inventory improved from 3.32 in September 2022 to 4.23 in June 2022 but decreased thereafter. The ratio stood at 4.22 on December 31, 2023, suggesting that the company generated $4.22 of sales for every dollar of inventory during the period.

2. Receivables turnover: Kontoor Brands Inc has shown a relatively consistent ability to collect its accounts receivables efficiently. The turnover ratio peaked at 13.98 in both June 2023 and June 2021, indicating that the company collected its receivables nearly 14 times during those periods. However, there was missing data for March 2023. The ratio was at 11.90 on December 31, 2023, which signifies that the company collected its receivables approximately 11.90 times during the period.

3. Payables turnover: The payables turnover ratio reflects how quickly the company pays its suppliers. Kontoor Brands Inc improved its payables turnover from 7.36 in September 2022 to 12.81 in March 2022 but experienced fluctuations thereafter. The ratio was 11.71 on December 31, 2023, demonstrating that the company paid its suppliers approximately 11.71 times during the period.

4. Working capital turnover: The working capital turnover ratio measures how effectively the company utilizes its working capital to generate sales. Kontoor Brands Inc's efficiency in this aspect fluctuated, with the ratio improving from 2.68 in March 2020 to 5.26 in June 2022, but showing variability thereafter. The ratio stood at 3.98 on December 31, 2023, indicating that the company generated sales of $3.98 for every dollar of working capital invested during the period.

Overall, while there have been fluctuations in Kontoor Brands Inc's activity ratios over the periods analyzed, the company has shown varying levels of efficiency in managing its inventory, receivables, payables, and working capital.

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Average number of days

The activity ratios of Kontoor Brands Inc provide insight into the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH):
- The DOH has shown fluctuations over the periods, ranging from 60.36 days to 114.82 days.
- A decrease in DOH indicates faster inventory turnover, which could be seen in the last quarter of 2022 and the first quarter of 2021.
- The significant increase in DOH in March 2023 suggests Kontoor Brands Inc may be holding onto inventory for a longer period, which could tie up working capital.

2. Days of Sales Outstanding (DSO):
- DSO measures how quickly the company collects payment from customers.
- The DSO ranged from 26.11 days to 43.45 days, with the lowest value in June 2020 and the highest in September 2021.
- Lower DSO values indicate that the company is collecting payments faster, which could be positive for cash flow and working capital management.

3. Number of Days of Payables:
- This ratio shows the number of days it takes for the company to pay off its suppliers.
- The trend in the number of days of payables ranged from 19.14 days to 49.58 days.
- A higher number of days of payables can indicate that the company is taking longer to pay off its suppliers, possibly to preserve cash flow.

In conclusion, analyzing these activity ratios together can provide a comprehensive view of the company's operational efficiency, inventory management, receivables collection, and payables management. Investors and analysts can track these ratios over time to assess the company's performance and operational strategies.

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Long-term

The fixed asset turnover ratio for Kontoor Brands Inc has been consistently high over the last several quarters, ranging from 19.77 to 25.38. This indicates that the company is generating significant revenue relative to its investment in fixed assets such as property, plant, and equipment. A high fixed asset turnover ratio typically suggests efficient utilization of fixed assets to generate sales.

On the other hand, the total asset turnover ratio has shown some fluctuation but generally remains within a narrow range of 1.23 to 1.68. This metric measures the company's ability to generate sales from all its assets, including both fixed and current assets. A higher total asset turnover ratio indicates that the company is generating more revenue per dollar of assets.

Overall, the high fixed asset turnover ratio coupled with a relatively stable total asset turnover ratio suggests that Kontoor Brands Inc is effectively utilizing its assets, especially its fixed assets, to drive sales and achieve operational efficiency. However, further analysis and comparison with industry benchmarks would provide a more comprehensive understanding of the company's performance in this area.