Lululemon Athletica Inc. (LULU)

Short-term

Turnover ratios

Lululemon Athletica Inc.'s activity ratios provide insights into its efficiency in managing its assets and liabilities.

1. Inventory Turnover: This ratio measures how many times inventory is sold and replaced within a specific period. Lululemon's inventory turnover has fluctuated over the years, indicating changes in demand or inventory management practices. A higher turnover ratio generally signifies effective inventory management.

2. Receivables Turnover: This ratio indicates how quickly the company collects payments from its customers. Lululemon's receivables turnover fluctuates with some periods where data is not available. A higher turnover ratio is preferable as it indicates efficient collections and credit policies.

3. Payables Turnover: This ratio measures how quickly the company pays its suppliers. Lululemon's payables turnover has varied over time. A lower turnover ratio could indicate that the company is taking longer to pay its bills, which could have implications for relationships with suppliers.

4. Working Capital Turnover: This ratio shows how efficiently the company is utilizing its working capital to generate sales. Lululemon's working capital turnover has shown fluctuation, with periods of both increase and decrease. A higher turnover ratio suggests that the company is effectively using its working capital to generate revenue.

Overall, analyzing these activity ratios provides valuable insights into Lululemon Athletica Inc.'s operational efficiency and effectiveness in managing its resources.

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Average number of days

Lululemon Athletica Inc.'s activity ratios provide insight into the efficiency of the company's operations in managing inventory, collecting receivables, and paying suppliers.

1. Days of Inventory on Hand (DOH):
- The trend in Lululemon's DOH shows some fluctuations over the periods provided, ranging from a low of 76.30 days to a high of 288.08 days.
- A higher number of DOH indicates that the company is holding onto inventory for a longer period before selling, which may tie up capital and increase the risk of inventory obsolescence.
- The decreasing trend in DOH towards the end of the data period suggests that Lululemon is managing its inventory more efficiently, possibly through better forecasting or supply chain management.

2. Days of Sales Outstanding (DSO):
- The DSO metric for Lululemon fluctuates, with some periods showing no data reported.
- A lower DSO indicates that the company is collecting receivables more quickly, which is favorable as it improves cash flow and reduces the risk of bad debts.
- The inconsistency in reporting DSO across periods makes it challenging to assess the effectiveness of Lululemon's credit and collection policies.

3. Number of Days of Payables:
- Lululemon's days of payables also vary across the periods provided, ranging from 17.46 days to 26.91 days.
- A lower number of days of payables indicates that the company is paying its suppliers more quickly, which may indicate strong liquidity but could strain supplier relationships if too aggressive.
- The stability in days of payables over time suggests that Lululemon has a consistent approach to managing its payables, balancing the need to maintain relationships with suppliers and optimize cash flow.

Overall, the analysis of Lululemon's activity ratios indicates some variability in efficiency metrics related to inventory management, accounts receivable, and accounts payable. Further trend analysis and benchmarking against industry peers would provide additional insights into the effectiveness of Lululemon's operational management.

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See also:

Lululemon Athletica Inc. Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

Long-term activity ratios provide insight into how efficiently a company is utilizing its assets over an extended period. Two key long-term activity ratios for Lululemon Athletica Inc. are the fixed asset turnover ratio and the total asset turnover ratio.

The fixed asset turnover ratio measures how effectively a company is generating revenue from its fixed assets. A higher fixed asset turnover ratio indicates that the company is efficiently utilizing its fixed assets to generate sales. Lululemon Athletica Inc.'s fixed asset turnover ratio fluctuated over the period provided, ranging from a low of 3.58 to a high of 7.73. The company demonstrated variability in its ability to generate sales from fixed assets, with some periods showing higher efficiency than others.

The total asset turnover ratio, on the other hand, evaluates how well a company is using all its assets to generate revenue. A higher total asset turnover ratio suggests that the company is effectively leveraging all its assets to generate sales. Lululemon Athletica Inc.'s total asset turnover ratio ranged from 1.31 to 1.69 over the period analyzed. The company's performance in utilizing all its assets to generate revenue also varied, with some periods showing better efficiency than others.

Overall, analyzing these long-term activity ratios can help in understanding Lululemon Athletica Inc.'s operational efficiency and asset utilization over time. It is important for investors and stakeholders to track these ratios to assess the company's ability to generate sales from its assets effectively.

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See also:

Lululemon Athletica Inc. Long-term (Investment) Activity Ratios (Quarterly Data)