MillerKnoll Inc (MLKN)

Short-term

Turnover ratios

The activity ratios of MillerKnoll Inc. exhibit notable variations over the reported periods, reflecting the company's operational efficiency and working capital management.

Inventory Turnover:
The inventory turnover ratio increased from 4.42 times as of May 31, 2022, to 5.45 times as of May 31, 2023, indicating an improvement in inventory management and faster inventory movement. However, a substantial jump to 8.09 times on June 3, 2023, suggests a further optimization period, possibly due to better inventory control or increased sales velocity. Subsequently, the ratio declined slightly to 5.15 times by May 31, 2024, implying a potential slowdown in inventory turnover or increased inventory levels relative to sales.

Receivables Turnover:
Receivables turnover ratio rose from 10.36 in May 2022 to 11.24 in May 2023, reflecting an enhancement in collection efficiency. The significant increase to 22.28 on June 3, 2023, indicates a marked improvement, possibly due to tightened credit policies or improved collection processes. This elevated level suggests that the company is collecting receivables more rapidly. However, by May 2024, the ratio decreased to 10.98, signaling a reversion closer to the earlier levels and possibly implying a relaxation in credit terms or collection efficiency.

Payables Turnover:
The payables turnover ratio increased from 7.30 in May 2022 to 9.86 in May 2023, demonstrating improved supplier payment frequency. The sharp rise to 14.63 on June 3, 2023, indicates the company paid its suppliers more frequently, which could be a result of better cash flow management or renegotiated payment terms. By May 2024, the ratio reduced to 9.15, suggesting a balancing of payment cycles, perhaps to optimize cash flow or maintain supplier relationships.

Working Capital Turnover:
The working capital turnover ratio decreased slightly from 8.96 in May 2022 to 8.63 in May 2023, implying a small reduction in efficiency in utilizing working capital. Nevertheless, a significant increase to 17.11 on June 3, 2023, points to a period where the company utilized its working capital more effectively, possibly due to increased sales or better asset management. By May 2024, the ratio dipped again to 9.76, indicating a moderation of this efficiency.

Overall, the data show a pattern of improved activity ratios around June 2023, followed by some normalization in the subsequent year. The fluctuations across these ratios suggest endeavors to optimize inventory, receivables, payables, and working capital, with periods of heightened efficiency possibly driven by strategic operational adjustments.

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Average number of days

The analysis of MillerKnoll Inc.'s activity ratios—specifically Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Days of Payables—provides insights into the company's operational efficiency over the period from May 2022 to May 2024, with data for May 2025 unavailable.

Days of Inventory on Hand (DOH):
There was a notable decrease in inventory holding periods from 82.66 days as of May 31, 2022, to 66.95 days as of May 31, 2023. This suggests an improvement in inventory management, potentially indicating more efficient inventory turnover or changes in supply chain dynamics. However, the subsequent sharp reduction to 45.13 days in June 2023 signifies an even more accelerated inventory turnover, possibly due to inventory reductions, increased sales efficiency, or strategic inventory clearance. By May 31, 2024, the DOH increased again to 70.82 days, suggesting a temporary buildup of inventory or a strategic shift towards holding more stock, which could reflect inventory replenishment or preparation for anticipated sales growth.

Days of Sales Outstanding (DSO):
The DSO decreased from 35.23 days in May 2022 to 32.46 days in May 2023, indicating slight improvements in receivables collection efficiency. The most significant change occurred in June 2023, when DSO sharply declined to 16.38 days, implying a substantial acceleration in receivables collection or perhaps tighter credit policies. Such a reduction enhances cash flow and liquidity but raises questions about the sustainability of these receivables collection strategies. By May 31, 2024, DSO increased modestly back to 33.25 days, suggesting a normalization or slight relaxation in collection speeds after the previous surge.

Number of Days of Payables:
The duration MillerKnoll Inc. takes to pay its suppliers decreased from 49.98 days in May 2022 to 37.02 days in May 2023, indicating a trend toward faster payments or improved payment practices. This reduction became more pronounced by June 2023, with payables days falling to 24.96 days, reflecting an aggressive approach to settling liabilities. Such a pattern could impair cash flow if not compensated by corresponding increases in working capital or sales. By May 31, 2024, the payables period rose again to 39.89 days, potentially signifying a return to more favorable or negotiated payment terms, or a measured approach to managing supplier relationships.

Summary:
Overall, the activity ratios exhibit a period of significant operational adjustments during 2023. The company demonstrated enhanced efficiency in inventory turnover and receivables collection within a short span, coupled with a more aggressive payables strategy. Post-June 2023, some ratios reverted to more moderate levels, suggesting a balance between operational efficiency and supplier relationship management. The fluctuations highlight strategic shifts in working capital management aimed at optimizing liquidity and operational performance.

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Long-term

The analysis of MillerKnoll Inc’s long-term activity ratios reveals notable fluctuations over the reported periods. The Fixed Asset Turnover ratio decreased from 12.06 on May 31, 2022, to 7.62 on May 31, 2023, indicating a decline in the efficiency with which the company is utilizing its fixed assets to generate sales. However, a significant increase to 15.10 on June 3, 2023, suggests an improvement in asset utilization shortly thereafter, potentially attributable to restructuring, asset sale, or operational efficiencies gained in the interim period.

Similarly, the Total Asset Turnover ratio experienced a modest rise from 0.88 on May 31, 2022, to 0.96 on May 31, 2023, suggesting a slight enhancement in overall asset efficiency. Yet, this ratio saw a dramatic surge to 1.89 on June 3, 2023, more than doubling the prior figures, which indicates a substantial improvement in the company’s ability to generate sales from its total assets and may reflect recent strategic shifts, operational efficiencies, or accounting adjustments.

The data for the period ending May 31, 2024, shows a return to lower ratio levels, with Fixed Asset Turnover at an unspecified value and Total Asset Turnover reverting to 0.90, suggesting a possible stabilization or contraction following the previous peak. The absence of data beyond May 31, 2024, precludes further trend analysis, but the observed fluctuations indicate a phase of operational reconfiguration or rebalancing of assets.

In summary, during the analyzed periods, MillerKnoll Inc experienced significant variability in its long-term activity ratios. Initial declines were followed by sharp improvements, particularly around the June 2023 date, reflecting potential strategic changes impacting asset utilization efficiency. Subsequent adjustments point toward stabilization efforts, but without additional data, conclusions about future trends remain limited.