Lamb Weston Holdings Inc (LW)

Short-term

Turnover ratios

Based on the provided data, we can analyze Lamb Weston Holdings Inc's activity ratios as follows:

1. Inventory Turnover:
- The inventory turnover ratio shows how many times a company's inventory is sold and replaced during a period.
- In May 2022, the inventory turnover was 5.69, indicating that Lamb Weston turned over its inventory approximately 5.69 times during that period.
- The turnover decreased to 4.80 in May 2023, suggesting a slower rate of inventory turnover.
- In May 2024, the turnover ratio increased to 4.75, indicating a slight improvement in inventory management.

2. Receivables Turnover:
- Receivables turnover ratio measures how efficiently a company collects on its credit sales.
- The data shows that there were missing values for receivables turnover in May 2022 and May 2023.
- However, in May 2024, the ratio improved to 8.69, indicating that receivables were collected more efficiently during that period.

3. Payables Turnover:
- Payables turnover ratio assesses how efficiently a company pays its suppliers.
- Similar to receivables turnover, there were missing values for payables turnover in May 2022 and May 2023.
- In May 2024, the ratio was 6.48, suggesting that Lamb Weston took approximately 6.48 days to pay its suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio indicates how effectively a company utilizes its working capital to generate sales.
- The ratio was 4.27 in May 2022 and improved to 7.00 in May 2023, showing a better utilization of working capital for sales generation.
- Furthermore, in May 2024, the ratio increased significantly to 13.88, reflecting a more efficient use of working capital to drive sales growth.

In conclusion, Lamb Weston Holdings Inc demonstrated varying levels of efficiency in managing its inventory, receivables, payables, and working capital turnover over the analyzed periods. The improvements in working capital turnover and receivables turnover ratios suggest enhanced operational efficiency and financial management practices.

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Average number of days

Based on the provided data for Lamb Weston Holdings Inc, we can analyze the company's activity ratios as follows:

1. Days of Inventory on Hand (DOH):
- The DOH reflects the average number of days it takes for a company to sell its inventory.
- Lamb Weston's DOH has shown an increasing trend from 64.18 days on May 31, 2022, to 88.41 days on May 31, 2024.
- A higher DOH indicates that the company is holding inventory for a longer period, which may tie up capital and potentially increase storage costs.

2. Days of Sales Outstanding (DSO):
- The DSO represents the average number of days it takes for a company to collect payment after a sale.
- Lamb Weston had DSO of 49.21 days on May 28, 2023, and 42.00 days on May 26, 2024.
- A lower DSO indicates that the company is collecting revenue more quickly, which is generally positive for cash flow and working capital management.

3. Number of Days of Payables:
- This ratio measures how long a company takes to pay its suppliers.
- Lamb Weston's number of days of payables was 51.91 days on May 28, 2023, and 56.32 days on May 26, 2024.
- A higher number of days of payables suggests that the company is taking longer to pay its suppliers, which can sometimes indicate a strain on relationships but can also help with cash flow management.

In summary, Lamb Weston Holdings Inc has seen an increase in its Days of Inventory on Hand over the years, indicating a longer time to sell inventory. The Days of Sales Outstanding has shown a decreasing trend, which implies an improvement in the collection of receivables. The Number of Days of Payables has slightly increased, suggesting a longer time taken by the company to pay its suppliers. Each of these ratios provides insights into the operational efficiency and liquidity management of the company.

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Long-term

Lamb Weston Holdings Inc's fixed asset turnover, which measures the efficiency of the company in generating sales from its investment in fixed assets, decreased from 2.41 in May 2022 to 1.81 in May 2024. This decline indicates that the company is generating fewer sales relative to its investment in fixed assets over this period.

The total asset turnover, which reflects the company's ability to generate sales from its total assets, decreased from 0.99 in May 2022 to 0.88 in May 2024. This decline suggests that Lamb Weston Holdings Inc is becoming less efficient in utilizing its total assets to generate sales.

Overall, the decreasing trend in both fixed asset turnover and total asset turnover ratios may raise concerns about the company's asset utilization efficiency and operational performance. Investors and analysts should closely monitor these ratios to evaluate the company's long-term productivity and operational effectiveness.