La-Z-Boy Incorporated (LZB)

Short-term

Turnover ratios

The activity ratios of La-Z-Boy Incorporated provide insight into the effectiveness and efficiency of the company's operations.

1. Inventory Turnover:
- The inventory turnover ratio has been relatively stable over the past five years, ranging from 4.40 to 5.41 times. This indicates that La-Z-Boy is effectively managing its inventory levels, with the ability to sell and replace its inventory multiple times a year.

2. Receivables Turnover:
- The receivables turnover ratio has shown some variability, but generally remained within a healthy range of 12.45 to 18.72 times. This suggests that La-Z-Boy is efficient in collecting payments from customers, converting credit sales into cash in a timely manner.

3. Payables Turnover:
- The payables turnover ratio has fluctuated but remained relatively consistent, ranging from 10.56 to 17.70 times. This indicates that the company is managing its payables effectively, balancing the payment to suppliers with the terms agreed upon.

4. Working Capital Turnover:
- The working capital turnover ratio has also varied over the years, but has generally shown a consistent trend. The ratio ranged from 5.12 to 8.54 times, indicating that La-Z-Boy is efficiently utilizing its working capital to generate sales revenue.

Overall, these activity ratios suggest that La-Z-Boy Incorporated is effectively managing its inventories, receivables, payables, and working capital to support its operations and generate revenue. The company's ability to efficiently turnover its assets and capital is a positive sign of operational efficiency and financial health.

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Average number of days

Activity ratios provide insights into how efficiently a company is managing its resources and operations. Let's analyze La-Z-Boy Incorporated's activity ratios based on the given data.

Days of inventory on hand (DOH) measures how many days it takes for a company to sell its inventory. La-Z-Boy's DOH has been fluctuating over the past five years, ranging from 67.48 days to 83.04 days. A higher DOH indicates slower inventory turnover, potentially tying up cash in unsold inventory or facing challenges in managing inventory levels.

Days of sales outstanding (DSO) shows the average number of days it takes for a company to collect payment after making a sale. La-Z-Boy's DSO has also shown variability, ranging from 19.50 days to 29.33 days. A lower DSO is generally preferred as it indicates faster collection of receivables, improving cash flow and liquidity.

Number of days of payables represents how long a company takes to pay its suppliers. La-Z-Boy's payables days have ranged from 20.62 days to 34.57 days. A longer payables period suggests the company is taking longer to settle its payables, potentially indicating strong negotiation power or strained relationships with suppliers.

In summary, La-Z-Boy's activity ratios reflect fluctuations in inventory management, sales collection efficiency, and payment practices over the past five years. The company may need to focus on optimizing inventory levels, improving receivables collection, and managing payables effectively to enhance operational efficiency and cash flow.

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Long-term

The long-term activity ratios of La-Z-Boy Incorporated reflect the efficiency with which the company utilizes its assets to generate sales. The fixed asset turnover ratio has exhibited a declining trend over the past five years, indicating that the company is generating less sales revenue per dollar invested in fixed assets. However, the ratio remains relatively high, which suggests that La-Z-Boy is efficiently utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio has fluctuated over the same period, with a peak in 2022. This ratio measures the company's overall efficiency in generating sales from all its assets, including both fixed and current assets. The decline in 2023 and 2024 indicates a decrease in the company's ability to generate sales revenue from its total asset base.

Overall, while La-Z-Boy's fixed asset turnover ratio remains relatively high, indicating efficient utilization of fixed assets, the fluctuating total asset turnover ratio suggests varying levels of efficiency in generating sales from all of the company's assets. Monitoring and improving these ratios may help La-Z-Boy enhance its operational efficiency and profitability in the long term.