Lowe's Companies Inc (LOW)

Working capital turnover

		Jan 31, 2025	Feb 2, 2024	Jan 31, 2024	Feb 3, 2023	Jan 31, 2023
Revenue	US$ in thousands	83,674,000	84,974,000	86,377,000	95,481,000	97,059,000
Total current assets	US$ in thousands	20,358,000	19,071,000	19,071,000	21,442,000	21,442,000
Total current liabilities	US$ in thousands	18,757,000	15,568,000	15,568,000	19,511,000	19,511,000
Working capital turnover		52.26	24.26	24.66	49.45	50.26

January 31, 2025 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $83,674,000K ÷ ($20,358,000K – $18,757,000K)
= 52.26

Working capital turnover is a financial ratio that measures how efficiently a company utilizes its working capital to generate sales revenue. Lowe's Companies Inc has shown fluctuations in its working capital turnover over the years. The ratio was 50.26 and 49.45 for January 31, 2023, and February 3, 2023, respectively. These figures indicate that the company generated $50.26 and $49.45 in net sales for every dollar of working capital invested during those periods.

However, the working capital turnover ratio decreased significantly to 24.66 and 24.26 for January 31, 2024, and February 2, 2024, respectively. This could suggest a possible inefficiency in managing working capital during those periods, as the company generated less revenue relative to the working capital deployed.

The ratio saw an improvement to 52.26 for January 31, 2025, indicating a more efficient utilization of working capital to generate sales revenue during that period. Overall, Lowe's Companies Inc should aim to maintain a consistent and high working capital turnover ratio to optimize its operational efficiency and profitability.