Lowe's Companies Inc (LOW)

Short-term

Turnover ratios

Based on the provided data on Lowe's Companies Inc activity ratios, here is a detailed analysis:

1. Inventory Turnover:
- Lowe's inventory turnover ratio has shown some fluctuations over the given periods, ranging from 3.23 to 4.32.
- Generally, a higher inventory turnover ratio indicates efficient management of inventory and quicker sales of products, which can lead to higher profitability.

2. Receivables Turnover:
- Receivables turnover data is unavailable (marked as "—"), possibly suggesting that the company does not provide credit sales or has minimal accounts receivable.
- A high receivables turnover ratio typically indicates that the company efficiently collects its accounts receivable in a timely manner.

3. Payables Turnover:
- The payables turnover ratio ranges from 5.09 to 7.44, showing varying payment cycles with suppliers.
- A higher payables turnover ratio may indicate that Lowe's is managing its payables effectively, possibly benefiting from favorable credit terms or discounts.

4. Working Capital Turnover:
- Lowe's working capital turnover ratio fluctuates significantly, ranging from 19.11 to 52.26.
- A higher working capital turnover ratio suggests that the company generates higher sales revenue relative to its working capital, which can indicate efficient use of resources.

Overall, analyzing these activity ratios provides insights into Lowe's efficiency in managing its inventory, receivables, payables, and working capital. The company's performance in these areas can impact its operational efficiency, profitability, and overall financial health.

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Average number of days

Based on the provided data for Lowe's Companies Inc, let's analyze the activity ratios:

1. Days of Inventory on Hand (DOH):
- The DOH for Lowe's fluctuated over the years, ranging from a low of 84.51 days to a high of 113.02 days.
- The average DOH for Lowe's during this period was approximately 99.63 days, indicating that the company holds inventory for nearly 100 days before selling it.
- The decreasing trend in DOH from October 2022 to February 2023 suggests an improvement in inventory management efficiency.
- However, the increase in DOH starting from April 2023 onwards may indicate potential inventory management challenges or changes in the company's operations.
- Overall, Lowe's should focus on optimizing inventory levels to avoid excess holding costs while meeting customer demand efficiently.

2. Days of Sales Outstanding (DSO):
- The data provided shows that DSO was not available for analysis, as indicated by the symbol "— days" for each reporting period.
- Without DSO data, it is challenging to assess how quickly Lowe's is collecting its accounts receivable from customers.
- DSO is a crucial metric that reflects the efficiency of a company's credit and collection processes, and its absence in the data restricts a comprehensive evaluation of Lowe's receivables management.

3. Number of Days of Payables:
- The number of days of payables for Lowe's varied from a low of 49.07 days to a high of 71.66 days during the period under review.
- The average number of days of payables was approximately 53.06 days, indicating that on average, Lowe's takes around 53 days to pay its suppliers.
- The decreasing trend in days of payables from August 2023 to February 2024 suggests a potential effort to optimize payables management and maintain good relationships with suppliers.
- However, the inconsistent pattern of payables days across different reporting periods may indicate changes in payment policies or supplier terms.
- Lowe's should ensure a balanced approach to managing payables to maintain positive supplier relationships while efficiently utilizing available cash resources.

In summary, while Lowe's has shown some fluctuations in its activity ratios over the years, particularly in inventory and payables management, the absence of data for DSO limits a complete assessment of the company's overall working capital efficiency. It is crucial for Lowe's to monitor these activity ratios closely to ensure optimal inventory levels, timely collections, and effective payables management for sustaining long-term financial health.

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See also:

Lowe's Companies Inc Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

Lowe's Companies Inc's fixed asset turnover ratio has shown fluctuation over the years, ranging from 3.86 to 5.88. This indicates that the company generated between $3.86 and $5.88 in sales for every dollar invested in fixed assets. The trend suggests an overall improvement in efficiency in utilizing fixed assets to generate revenue.

On the other hand, the total asset turnover ratio has also experienced variations, with values ranging from 1.73 to 2.21. This ratio reflects how efficiently the company is using its total assets to generate sales. The values indicate that Lowe's was able to generate sales of $1.73 to $2.21 for every dollar invested in total assets.

Overall, both the fixed asset turnover and total asset turnover ratios of Lowe's show some level of efficiency in utilizing assets to generate sales. The fluctuation in these ratios over time may suggest changing business strategies or fluctuations in the company's performance.

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See also:

Lowe's Companies Inc Long-term (Investment) Activity Ratios (Quarterly Data)