Lamb Weston Holdings Inc (LW)

Short-term

Turnover ratios

The analysis of Lamb Weston Holdings Inc.'s activity ratios over the specified periods reveals several notable trends and performances across inventory turnover, receivables turnover, payables turnover, and working capital turnover.

Inventory Turnover: The inventory turnover ratio experienced fluctuations, initially decreasing from 4.80 on May 28, 2023, to 4.20 on May 31, 2023. Subsequently, it increased to 4.75 by May 26, 2024, before decreasing slightly to 4.13 on May 31, 2024. By May 31, 2025, the ratio increased again to 4.88. This pattern suggests a general trend of improved inventory management in the later years, with the ratio peaking in 2025, indicating more efficient inventory utilization and faster turnover periods.

Receivables Turnover: The receivables turnover rate was relatively stable between May 28 and May 31, 2023, at approximately 7.4. A notable increase occurred by May 26, 2024, reaching 8.69, and remained stable at 8.70 on May 31, 2024. By May 31, 2025, however, this ratio decreased somewhat to 8.25. The upward movement signifies an improvement in receivables collection efficiency around 2024, which then slightly declined but remained higher than the 2023 levels, reflecting generally effective credit and collection policies.

Payables Turnover: The payables turnover ratio displayed variability, with a decrease from 7.03 on May 28, 2023, to 6.16 on May 31, 2023. Subsequently, there was a modest increase to 6.48 by May 26, 2024, but a decrease to 5.64 on May 31, 2024. A notable increase occurred by May 31, 2025, reaching 8.20. The significant rise in 2025 suggests the company extended its payables period, possibly enhancing cash flow management or taking advantage of supplier terms, indicating a strategic shift toward optimizing liquidity.

Working Capital Turnover: The working capital turnover ratio was relatively stable in 2023, with a slight increase from 7.00 to 6.98. A significant jump occurred in 2024, rising sharply to 13.87 on May 26 and marginally increasing to 13.88 on May 31, 2024. In 2025, the ratio decreased slightly to 11.59. The substantial increase in 2024 indicates a higher efficiency in utilizing working capital to generate sales, coinciding with improved operational efficiencies. The slight reduction in 2025 suggests a stabilization or slight decline in this efficiency metric but remains significantly higher than the 2023 levels.

Overall, these activity ratios suggest that Lamb Weston Holdings Inc. has been progressing towards more efficient inventory and receivables management, alongside strategic adjustments in payables, particularly evident with the notable increase in payables turnover in 2025. These developments reflect ongoing efforts to optimize working capital and enhance operational efficiency over the observed periods.

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Average number of days

The activity ratios for Lamb Weston Holdings Inc., as reflected in the provided data, demonstrate notable trends over the periods analyzed.

The Days of Inventory on Hand (DOH) indicates the duration, in days, that inventory remains held before sale. The data shows a decrease from 86.81 days on May 31, 2023, to 75.99 days on May 28, 2023, then a rise to 88.41 days by May 31, 2024, before declining again to 74.80 days by May 31, 2025. These fluctuations suggest variability in inventory management, with periods of increased inventory holding possibly indicating stockpiling or supply chain challenges, followed by improvements or normalization.

The Days of Sales Outstanding (DSO) reflects the average collection period for receivables. The figures indicate a slight decrease from 49.40 days on May 31, 2023, to 42.00 days on May 26, 2024, suggesting an improvement in receivables collection efficiency during this period. However, by May 31, 2025, DSO slightly increases to 44.22 days, potentially indicating a marginal slowdown in receivables collection or changes in credit policy.

The Number of Days of Payables measures the average period the company takes to pay its suppliers. The data reveals a decrease from 59.30 days on May 31, 2023, to 56.32 days on May 26, 2024, implying a slightly shorter credit period extended to suppliers. Subsequently, the period extends significantly to 64.74 days on May 31, 2024, before contracting to 44.53 days on May 31, 2025. This pattern indicates active management of payables, potentially leveraging extended credit terms to optimize cash flow, followed by a reduction in payable days, possibly as part of strategic payment or liquidity management.

Overall, these activity ratios suggest that Lamb Weston Holdings Inc. has experienced periods of operational adjustments aimed at optimizing inventory levels, collection processes, and payable management, reflecting responsiveness to market conditions and internal strategic initiatives.

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Long-term

The analysis of Lamb Weston Holdings Inc.'s long-term activity ratios reveals notable insights into the company's asset utilization efficiency over the specified periods. The Fixed Asset Turnover ratio, which measures how effectively the company utilizes its fixed assets to generate sales, exhibited fluctuations during the observed timeframe. It decreased from 1.92 on May 28, 2023, to 1.81 on May 31, 2023, indicating a slight decline in efficiency in utilizing fixed assets. The ratio remained steady at 1.81 on May 26, 2024, but then declined further to 1.74 by May 31, 2024, suggesting a continued, albeit modest, reduction in fixed asset utilization efficiency over this interval. The absence of data for May 31, 2025, precludes further trend analysis.

The Total Asset Turnover ratio, reflecting the overall efficiency in using all assets to generate sales, showed a relatively stable but slightly positive trend. It maintained a value of 0.82 on May 28 and May 31, 2023, indicating consistent total asset utilization during this period. The ratio increased to 0.88 by May 26, 2024, and remained at 0.88 on May 31, 2024, signaling an improvement in asset efficiency. A marginal decrease to 0.87 by May 31, 2025, suggests a slight decline but overall stability in total asset utilization.

In summary, Lamb Weston Holdings Inc. experienced a moderate decline in fixed asset efficiency over the course of the analyzed period, while its overall asset utilization improved initially and then stabilized, reflecting changes in operational efficiency and asset management practices over time.