Lowe's Companies Inc (LOW)
Activity ratios
Short-term
Turnover ratios
| Jan 31, 2025 | Feb 2, 2024 | Jan 31, 2024 | Feb 3, 2023 | Jan 31, 2023 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.21 | 4.43 | 3.41 | 4.91 | 3.50 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | 8.60 | — | 8.65 | — |
| Working capital turnover | 52.26 | 24.26 | 24.66 | 49.45 | 50.26 |
Lowe's Companies Inc's activity ratios provide insight into how efficiently the company manages its assets and liabilities.
1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory in a given period. From the data provided, Lowe's inventory turnover has fluctuated over the years but generally remains within a range of 3 to 5 times. A higher inventory turnover indicates better inventory management and faster sales of goods.
2. Receivables Turnover:
- Receivables turnover ratio gauges how many times a company collects its accounts receivable during a specific period. The data shows that Lowe's did not report any figures for receivables turnover, which could suggest that the company's credit sales practices are minimal or not significant in the context of their overall operations.
3. Payables Turnover:
- The payables turnover ratio reflects how efficiently a company pays off its suppliers and vendors. Lowe's payables turnover shows consistent figures around 8 to 9 times, indicating that the company manages to settle its payables relatively quickly. This demonstrates good liquidity management and effective vendor relationships.
4. Working Capital Turnover:
- Working capital turnover ratio measures how effectively a company utilizes its working capital to generate sales revenue. Lowe's working capital turnover has shown varying trends, with values ranging from the mid-20s to over 50. A higher working capital turnover ratio signifies that the company is efficiently using its current assets to drive sales and business operations.
In summary, Lowe's activity ratios suggest that the company generally manages its inventory, payables, and working capital effectively, while the lack of data on receivables turnover may indicate a lower emphasis on credit sales in the company's business model.
Average number of days
| Jan 31, 2025 | Feb 2, 2024 | Jan 31, 2024 | Feb 3, 2023 | Jan 31, 2023 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 113.88 | 82.42 | 107.18 | 74.28 | 104.38 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | 42.46 | — | 42.18 | — |
Based on the provided data for Lowe's Companies Inc, we can analyze the activity ratios as follows:
1. Days of Inventory on Hand (DOH):
- As of January 31, 2023, the company had an inventory turnover rate of 104.38 days, indicating that on average, it took 104.38 days to sell its inventory.
- This figure improved significantly by February 3, 2023, to 74.28 days, suggesting a more efficient management of inventory.
- The trend continued in the following years with some fluctuations, as the days of inventory on hand increased to 107.18 days on January 31, 2024, and then decreased to 82.42 days by February 2, 2024. By January 31, 2025, the days of inventory on hand rose to 113.88 days, indicating a longer holding period for inventory.
2. Days of Sales Outstanding (DSO):
- The data provided does not include information on the days of sales outstanding for any of the reporting periods, suggesting that the company's accounts receivable turnover rate is not directly available from these figures.
3. Number of Days of Payables:
- As of February 3, 2023, Lowe's had an average payment period of 42.18 days, indicating that the company took approximately 42.18 days to pay its suppliers.
- Again, the data does not provide information on the days of payables for the other reporting periods, limiting our ability to analyze the company's accounts payable turnover rate over time.
Overall, based on the available data, we observe fluctuations in Lowe's inventory turnover rate, with improvements in inventory management efficiency in some periods and a longer holding period in others. Additionally, the lack of information on DSO and incomplete data on the days of payables hinders a complete assessment of the company's liquidity and cash conversion cycle efficiency.
See also:
Long-term
| Jan 31, 2025 | Feb 2, 2024 | Jan 31, 2024 | Feb 3, 2023 | Jan 31, 2023 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | 4.93 | — | 5.44 | 4.60 |
| Total asset turnover | 1.94 | 2.03 | 2.07 | 2.18 | 2.22 |
Long-term activity ratios provide insights into how efficiently a company is utilizing its assets to generate sales. Let's analyze Lowe's Companies Inc's long-term activity ratios based on the given data:
1. Fixed Asset Turnover:
- The fixed asset turnover ratio indicates how effectively a company is generating sales from its fixed assets.
- Lowe's fixed asset turnover ratio fluctuated over the years, with values of 4.60 in January 31, 2023, 5.44 in February 3, 2023, 4.93 in February 2, 2024.
- The ratio values suggest that Lowe's was able to generate sales efficiently from its fixed assets during the periods provided.
2. Total Asset Turnover:
- The total asset turnover ratio measures how well a company is utilizing all its assets to generate revenue.
- Lowe's total asset turnover ratio ranged from 1.94 to 2.22 over the years.
- A decreasing trend in total asset turnover may indicate that Lowe's was less efficient in generating sales from its total assets in January 31, 2023, compared to January 31, 2025.
In summary, while Lowe's exhibited strong efficiency in generating sales from its fixed assets over the years, there was a slight decrease in its overall efficiency in utilizing all assets to generate revenue. It would be important to further investigate the factors contributing to these trends to make informed conclusions about the company's operational performance.