Leslies Inc (LESL)

Short-term

Turnover ratios

Leslies Inc has shown improvements in its inventory turnover ratio over the past three years, indicating that the company is managing its inventory more efficiently. This could be due to better inventory management practices or increased sales efficiency.

The receivables turnover ratio has also increased steadily, which suggests that Leslies Inc is collecting its accounts receivable at a faster rate, possibly due to stricter credit policies or more effective collection procedures.

On the other hand, the payables turnover ratio has shown fluctuations over the years, with a significant increase in 2023. This could indicate that the company is taking longer to pay its suppliers, possibly to maintain better cash flow management or negotiate more favorable payment terms.

The working capital turnover ratio has generally been increasing, which indicates that Leslies Inc is generating sales revenue more efficiently with its working capital. This could be attributed to improved operational efficiency or effective utilization of its current assets and liabilities.

Overall, the activity ratios suggest that Leslies Inc has been making positive strides in managing its inventory, receivables, payables, and working capital to enhance operational efficiency and financial performance.

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Average number of days

To analyze Leslies Inc's activity ratios, we will look at its days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables for the years ending September 30, 2023, 2022, and 2021.

Days of Inventory on Hand (DOH):
- In 2023, the company held inventory for an average of 82.29 days, which decreased from 97.49 days in 2022. This implies a more efficient management of inventory compared to the previous year.
- However, the DOH was higher compared to 2021, where it stood at 62.53 days. This indicates a potential buildup of inventory which might tie up capital.

Days of Sales Outstanding (DSO):
- The DSO for 2023 was 9.30 days, a decrease from 11.88 days in 2022. This suggests that the company is collecting its accounts receivable faster.
- Similarly, the DSO for 2023 improved compared to 12.21 days in 2021, indicating better receivables management over the years.

Number of Days of Payables:
- The number of days of payables for 2023 was 15.45 days, a significant decrease from 42.17 days in 2022. This suggests that the company is taking longer to pay its suppliers, potentially implying better cash flow management or negotiation terms.
- Comparing to 2021, where the payables were at 31.76 days, the company is paying its suppliers faster in 2023.

Overall, the trends in Leslies Inc's activity ratios show improvements in managing inventory turnover, collecting receivables faster, and delaying payments to suppliers in 2023 compared to prior years. These changes indicate potential enhancements in working capital management and operational efficiency.

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Long-term

Long-term activity ratios provide insights into how efficiently a company is utilizing its assets over the long term. In the case of Leslies Inc, the fixed asset turnover ratio has decreased from 19.62 in 2022 to 15.35 in 2023, indicating a decline in the company's ability to generate sales from its fixed assets. This could be a sign of underutilization or inefficiency in managing its fixed assets.

On the other hand, the total asset turnover ratio is relatively stable, with a slight decrease from 1.38 in 2022 to 1.34 in 2023. While this ratio indicates how well the company is using all of its assets to generate sales, the stability suggests that Leslies Inc is maintaining a consistent level of sales relative to its total assets over the long term.

Overall, the decreasing trend in the fixed asset turnover ratio for Leslies Inc warrants further investigation into the company's fixed asset management and operational efficiency, while the stability of the total asset turnover ratio indicates a relatively steady performance in utilizing all assets to generate sales.