MSC Industrial Direct Company Inc (MSM)
Receivables turnover
| Sep 2, 2023 | Sep 3, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 3,986,180 | 3,683,500 | 3,228,150 | 3,174,920 | 3,363,820 |
| Receivables | US$ in thousands | 435,421 | 687,608 | 560,373 | 491,743 | 541,091 |
| Receivables turnover | 9.15 | 5.36 | 5.76 | 6.46 | 6.22 |
September 2, 2023 calculation
Receivables turnover = Revenue ÷ Receivables
= $3,986,180K ÷ $435,421K
= 9.15
The receivables turnover ratio measures how efficiently a company is able to collect its accounts receivable during a specific period. A higher turnover ratio indicates that the company is collecting its receivables more quickly, which could be a sign of effective credit policies and strong customer payment practices.
Looking at the receivables turnover for MSC Industrial Direct Co., Inc. over the past five years, we can observe a fluctuating trend. In September 2023, the receivables turnover stood at 9.21, representing a significant improvement compared to the previous year. This indicates that MSC was able to collect its receivables at a much faster rate in 2023.
The sharp increase in receivables turnover from 5.37 in September 2022 to 9.21 in September 2023 suggests improved efficiency in collecting payments from customers, which may positively impact the company's cash flow and liquidity. This could be attributed to more effective credit and collection policies, stricter payment terms, or a shift in customer payment behavior.
However, it is important to consider the context surrounding this change in receivables turnover. A sudden and significant increase in receivables turnover could also be a result of declining sales, tighter credit policies that lead to decreased sales on credit, or collection practices that may impact customer relationships.
It's also noteworthy that the receivables turnover ratio has fluctuated over the past five years, with values ranging between 5.37 and 9.21. These fluctuations may be indicative of changes in the company's credit and collection policies, shifts in its customer base or industry, or changes in economic conditions impacting customer payment behavior.
Overall, the recent increase in MSC Industrial Direct Co., Inc.'s receivables turnover ratio suggests an improvement in the efficiency of its accounts receivable management. However, further analysis of the factors driving this change and its potential impact on the overall financial performance and customer relationships of the company would provide a more comprehensive understanding of the situation.
Peer comparison
Sep 2, 2023