Macy’s Inc (M)

Short-term

Turnover ratios

Macy's Inc activity ratios paint a picture of its operational efficiency and effectiveness in managing various aspects of its working capital.

1. Inventory turnover: Macy's demonstrates a consistent level of efficiency in managing its inventory turnover, with an average ratio of around 5. This indicates that the company is able to sell and replace its inventory approximately 5 times a year. The increase in inventory turnover from 2021 to 2024 suggests an improvement in managing inventory levels and sales.

2. Receivables turnover: Macy's has a high receivables turnover, indicating that the company efficiently collects its accounts receivable. The average ratio of around 100 suggests that Macy's collects its receivables approximately 100 times a year. The slight fluctuations in the ratio over the years indicate stability in the company's collection efficiency.

3. Payables turnover: Macy's demonstrates a relatively stable payables turnover ratio, averaging around 10. This suggests that the company efficiently manages its accounts payable, on average settling its payables around 10 times a year. The increase in payables turnover from 2021 to 2024 indicates that Macy's may be managing its payment obligations more efficiently.

4. Working capital turnover: Macy's exhibits a fluctuating but generally healthy working capital turnover ratio, with an average of approximately 23. This ratio indicates how effectively the company utilizes its working capital to generate sales. The variations in the ratio over the years suggest changes in the company's operational efficiency and ability to generate revenue with the available working capital.

Overall, Macy's Inc activity ratios suggest that the company effectively manages its inventory, receivables, payables, and working capital to support its operational activities and drive revenue generation.

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Average number of days

Analyzing Macy's Inc activity ratios over the given period, we observe fluctuations in key measures:

1. Days of Inventory on Hand (DOH):
- Macy's inventory management has shown variability, with DOH ranging from 52.22 days to 108.98 days.
- The trend indicates some improvement in inventory turnover efficiency, as DOH decreased from 108.98 days in November 2019 to 67.11 days in February 2024.

2. Days of Sales Outstanding (DSO):
- DSO has exhibited stability overall, fluctuating moderately between 2.56 days and 6.03 days.
- Lower DSO values are generally positive, suggesting prompt collection of receivables and efficient credit management.

3. Number of Days of Payables:
- Macy's payment period to suppliers has varied notably, ranging from 20.54 days to 63.71 days.
- Longer payment periods may indicate favorable terms with suppliers, but could also signal liquidity challenges or strained relationships.

In summary, Macy's has shown improvements in inventory management efficiency, stable sales collection patterns, and varying payment terms to suppliers over the analyzed period. Monitoring these activity ratios can provide insights into the company's operational effectiveness and financial health.

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Long-term

The fixed asset turnover ratio for Macy’s Inc has displayed some fluctuations over the previous periods, ranging from a high of 4.50 to a low of 2.92. The ratio indicates that for each dollar invested in fixed assets, the company generated between $2.92 and $4.50 in revenue. Generally, a higher fixed asset turnover ratio is preferable, as it suggests efficient utilization of fixed assets to generate revenue.

In contrast, the total asset turnover ratio has also varied, reflecting values from 1.47 to 0.98. This ratio signifies the company's ability to generate sales from its total assets. A higher total asset turnover ratio implies that the company is effectively utilizing its assets to generate revenue.

Overall, Macy’s Inc has shown fluctuations in both fixed asset turnover and total asset turnover ratios over the evaluated periods. It is essential for investors and stakeholders to closely monitor these ratios to assess the company's efficiency in utilizing its assets to generate revenue.