Lamb Weston Holdings Inc (LW)

Short-term

Turnover ratios

Lamb Weston Holdings Inc's activity ratios provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital.

1. Inventory turnover: This ratio indicates how many times Lamb Weston turns over its inventory during the period. The average inventory turnover is around 5.7 times per year, showing that the company is effectively managing its inventory levels and selling products in a timely manner.

2. Receivables turnover: This ratio measures how well Lamb Weston collects payments from customers. With an average receivables turnover of 9.2 times per year, it suggests that the company efficiently converts credit sales into cash, indicating effective credit management practices.

3. Payables turnover: This ratio demonstrates how quickly Lamb Weston pays its suppliers. The company has an average payables turnover of 8.6 times per year, indicating that it manages its accounts payable efficiently and may have favorable payment terms with suppliers.

4. Working capital turnover: This ratio measures how efficiently Lamb Weston utilizes its working capital to generate sales. The average working capital turnover is approximately 6.9 times per year, indicating that the company effectively leverages its current assets to drive revenue growth.

Overall, Lamb Weston Holdings Inc exhibits strong performance in managing its activity ratios, reflecting efficient inventory management, effective receivables collection, prudent payables handling, and productive utilization of working capital.

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Average number of days

Days of inventory on hand (DOH) for Lamb Weston Holdings Inc have been fluctuating over the past few periods, ranging from a low of 50.49 days to a high of 79.91 days. This indicates variability in the company's ability to efficiently manage its inventory levels. The trend suggests some inconsistency in inventory management efficiency.

Days of sales outstanding (DSO) have also varied, with the company taking between 32.92 to 49.41 days to collect its receivables. Lower DSO values indicate quicker collection of receivables, which can improve cash flow and liquidity. In this case, Lamb Weston has shown some stability in managing its accounts receivable efficiently, with DSO staying within a relatively narrow range.

The number of days of payables have also fluctuated, ranging from 27.52 days to 57.75 days. A shorter period implies the company is taking longer to pay its suppliers, which can be advantageous in managing cash flow. However, consistently delaying payments may strain supplier relationships. Lamb Weston's payables period has shown some variation but has generally remained within a reasonable range.

Overall, Lamb Weston's activity ratios highlight some areas of inconsistency in inventory management but show relative stability in managing accounts receivable and payables. Continued monitoring and improvements in inventory turnover can potentially enhance working capital efficiency.

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Long-term

Lamb Weston Holdings Inc's long-term activity ratios provide insights into the efficiency of the company in utilizing its assets to generate sales. The fixed asset turnover ratio has shown some fluctuations over the analysed periods, ranging from 1.81 to 2.57. This ratio indicates that the company generates between $1.81 to $2.57 in sales for every dollar invested in fixed assets. The increasing trend in fixed asset turnover over time suggests an improvement in the utilization of fixed assets to generate sales.

On the other hand, the total asset turnover ratio also displays variability, ranging from 0.81 to 1.19. This ratio indicates how efficiently the company generates sales from all its assets. The fluctuating trend in total asset turnover suggests varying levels of asset efficiency over the analysed periods. When compared to fixed asset turnover, the total asset turnover ratio reflects the overall asset utilization efficiency of the company.

Overall, the variations in both fixed asset turnover and total asset turnover ratios indicate that Lamb Weston Holdings Inc has been managing its assets differently over time to generate sales. The company's ability to maintain or improve these activity ratios indicates sound asset management practices, which can contribute to long-term financial performance and sustainability.