Lowe's Companies Inc (LOW)
Activity ratios
Short-term
Turnover ratios
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.43 | 4.91 | 4.78 | 4.94 | 5.00 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | 8.60 | 8.65 | 7.41 | 7.35 | 8.60 |
| Working capital turnover | 24.26 | 49.45 | 243.28 | 24.38 | 525.22 |
1. Inventory turnover:
Lowe's inventory turnover has been relatively stable over the past five years, with a slight decrease from 5.00 in 2020 to 4.43 in 2024. This indicates that Lowe's is selling its inventory approximately 4.43 times a year, which is lower compared to the previous years. A lower inventory turnover ratio could suggest potential issues with managing inventory levels or sales performance.
2. Receivables turnover:
Unfortunately, there is no data available for the receivables turnover ratio, which measures how efficiently Lowe's is collecting payments from its customers. Without this information, it is difficult to assess the effectiveness of Lowe's credit and collections policies.
3. Payables turnover:
Lowe's payables turnover has shown a slightly increasing trend over the past five years, with a peak of 8.65 in 2023 and a slight decrease to 8.60 in 2024. This ratio indicates that Lowe's is paying its suppliers approximately 8.60 times per year. A higher payables turnover ratio suggests that Lowe's is efficiently managing its trade credit obligations, possibly negotiating favorable credit terms with suppliers.
4. Working capital turnover:
Lowe's working capital turnover has varied significantly over the years, with a notable decrease from 525.22 in 2020 to 24.26 in 2024. This ratio represents how efficiently Lowe's is using its working capital to generate sales revenue. A lower working capital turnover ratio could signify that Lowe's may not be effectively utilizing its current assets to support sales growth.
In conclusion, while Lowe's payables turnover indicates efficient management of trade credit obligations, the declining trends in inventory turnover and working capital turnover may warrant further investigation into the company's inventory management and working capital utilization strategies. The absence of data for receivables turnover limits a comprehensive analysis of Lowe's overall activity ratios.
Average number of days
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 82.42 | 74.28 | 76.36 | 73.93 | 73.07 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | 42.46 | 42.18 | 49.24 | 49.69 | 42.46 |
Days of inventory on hand (DOH) measures how many days a company typically holds inventory before selling it, indicating efficiency in managing inventory levels. Lowe's DOH has been increasing over the past five years, from 73.07 days in 2020 to 82.42 days in 2024, suggesting a potential slowdown in inventory turnover.
Days of sales outstanding (DSO) is not provided in the data, making it difficult to assess the efficiency of Lowe's in collecting accounts receivable.
Number of days of payables measures how long it takes for a company to pay its suppliers. Lowe's days of payables have fluctuated over the years, from 42.46 days in 2020 to 49.24 days in 2022, before decreasing to 42.46 days again in 2024. This indicates variability in the payment terms with suppliers.
Overall, Lowe's appears to be holding inventory for a longer period before selling, and its payment terms with suppliers have shown some inconsistency. Further analysis and comparison with industry benchmarks would provide better insights into its operational efficiency and working capital management.
See also:
Lowe's Companies Inc Short-term (Operating) Activity Ratios
Long-term
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.93 | 5.44 | 5.00 | 4.58 | 3.81 |
| Total asset turnover | 2.03 | 2.18 | 2.14 | 1.88 | 1.81 |
The fixed asset turnover ratio for Lowe's Companies Inc has shown a decreasing trend over the past five years, indicating that the company is generating less revenue from its fixed assets. This decrease may suggest inefficiencies in utilizing fixed assets to generate sales.
On the other hand, the total asset turnover ratio has also shown a gradual decline over the same period, indicating that the company is becoming less efficient in generating sales from its total assets. This decrease could imply that Lowe's is experiencing challenges in utilizing its overall assets effectively to drive revenue.
Overall, both the fixed asset turnover and total asset turnover ratios for Lowe's Companies Inc have decreased over the past five years, which may raise concerns about the company's operational efficiency and management of its asset base. Further investigation into the reasons behind these declining ratios could provide insights into potential areas for improvement within the company's long-term activity performance.