The Marzetti Company (MZTI)

Short-term

Turnover ratios

The activity ratios of The Marzetti Company exhibit various trends over the analyzed periods, highlighting aspects of inventory management, receivables collection, payables settlement, and working capital efficiency.

Inventory Turnover:
The inventory turnover ratio indicates how efficiently the company manages its inventory. From September 2020 to March 2021, there was a steady increase from approximately 8.94 to 9.93, suggesting improved inventory management and faster sales cycles. However, during the subsequent periods, the ratio experienced fluctuations; notably, it declined to a low of 7.09 in September 2021 before recovering to around 9.98 in December 2022. Despite minor dips, the ratio generally remained within the 7.45 to 9.98 range, reflecting consistency in inventory turnover, with a moderate tendency to stabilize or slightly improve toward the end of the period.

Receivables Turnover:
The receivables turnover ratio demonstrates the company's effectiveness in collecting accounts receivable. The ratio varied from a lower of approximately 13.88 in September 2020 to a high of 19.92 in June 2025. An increasing trend, especially evident from March 2022 onward, indicates a strengthening in collection efficiency. The significant rise in this ratio suggests an improved credit policy or more effective collection processes, reducing the average collection period over time.

Payables Turnover:
This ratio reflects the company's payment practices to suppliers. Initially, the ratio fluctuated around 11.33 to 11.37 in 2020, then experienced a decline to approximately 8.79 in September 2021, indicating a lengthening of payment periods. Subsequently, the ratio increased notably and stabilized around 12 to 13.92, especially from late 2022 onward. Elevated ratios imply faster payments to suppliers, while the dips suggest periods of extended payment periods, possibly reflecting strategic management of payable obligations.

Working Capital Turnover:
This ratio assesses how effectively the company utilizes its working capital to generate sales. The data shows an upward trend from about 5.01 in September 2020 to a peak of approximately 9.33 in March 2023, indicating enhanced utilization efficiency. Nevertheless, subsequent periods exhibit a declining pattern, with ratios dropping below 7.5 during late 2024, implying diminishing efficiency in working capital deployment or a strategic buildup of working capital for operational or liquidity reasons.

In aggregate, these activity ratios suggest that The Marzetti Company has generally improved its receivables collection efficiency over the period, maintained stable inventory management with occasional fluctuations, and has varied its payables management to optimize cash flows. The rise in receivables turnover and stabilization of inventory turnover ratios denote effective operational controls, while the fluctuations in payables and working capital turnover reflect adaptive cash management strategies aligned with broader operational conditions.

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Average number of days

The activity ratios of The Marzetti Company, as reflected by the data on days of inventory on hand (DOH), days of sales outstanding (DSO), and days of payables, exhibit notable trends over the specified periods from September 2020 through June 2025.

Days of Inventory on Hand (DOH):
The company's inventory turnover cycle has demonstrated fluctuations over the analyzed periods. In September 2020, inventory days stood at approximately 40.85 days, decreasing slightly to around 39.77 days by the end of 2020. A further reduction occurred in March 2021 to approximately 36.76 days, indicating improved inventory efficiency. However, the cycle lengthened significantly in September 2021 to approximately 51.45 days, suggesting a slowdown in inventory turnover, potentially reflecting increased inventory levels or slower sales. Subsequently, DOH decreased again, hitting a low of approximately 36.58 days in December 2022 before stabilizing around 39.60 days in March 2023. The subsequent periods show a mild upward trend, peaking at about 49.01 days in September 2024, which indicates a period of inventory buildup or slower inventory turnover, before somewhat moderating to approximately 42.52 days by June 2025. Overall, the inventory management cycle has experienced periods of both efficiency improvements and slowdowns, with recent data indicating a tendency toward higher inventory levels relative to sales.

Days of Sales Outstanding (DSO):
The receivables collection period has shown a generally declining trend. Starting at approximately 26.29 days in September 2020 and fluctuating slightly, the DSO reduced to a low of approximately 19.59 days in December 2023. The trend suggests improving efficiency in collecting receivables, reflected by shorter collection periods. The most recent figures indicate a slight increase to about 20.67 days in March 2025, but overall, the company's collection cycle has been relatively stable and improving over the period, indicating effective receivables management.

Number of Days of Payables:
The company’s payable cycle has shown variability but generally trending toward shorter periods. In September 2020, payables averaged around 32.23 days, with fluctuations leading to a peak of approximately 41.51 days in September 2021. Since then, a consistent decline is observed, reaching approximately 26.22 days at the end of 2023. The most recent data from June 2025 shows payables averaging around 29.62 days, indicating a more prompt payment behavior compared to earlier periods. The overall trend suggests an effort to optimize payments, reducing the number of days payable, which may reflect strengthened working capital management or shifts in supplier payment terms.

Summary:
The company's activity ratios illustrate a dynamic management of operations across inventory, receivables, and payables. The inventory turnover period has experienced periods of elongation, especially in 2021 and late 2024, which could be associated with inventory accumulation or sales cycle changes. The receivables collection period has improved steadily over time, showcasing enhanced credit and collection policies. Conversely, the days payable ratio has generally decreased, indicating more strategic or disciplined payment practices. These trends collectively suggest efforts toward operational efficiency, with periods of adjustment reflective of broader strategic or market factors.

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Long-term

The long-term activity ratios for The Marzetti Company, specifically the fixed asset turnover and total asset turnover, exhibit notable insights over the periods analyzed.

The fixed asset turnover ratio data is unavailable for all periods, showing an absence of meaningful analysis for this metric. Consequently, commentary on the efficiency of fixed asset utilization cannot be provided.

In contrast, the total asset turnover ratio demonstrates a consistent upward trend from September 30, 2020, through June 30, 2023. Starting at approximately 1.31 in September 2020, the ratio gradually increased to approximately 1.64 by June 2023. This indicates a progressive enhancement in the company's efficiency in generating sales from its total assets over this period. The ratio maintains relative stability into subsequent quarters, with slight fluctuations: it remains around 1.64 during September 2023, then shows a modest decrease to approximately 1.50 by June 2025.

This pattern suggests that The Marzetti Company has been increasingly effective at utilizing its assets to generate sales up until mid-2023. The stabilization and slight decline in the later periods may reflect operational adjustments, asset utilization efficiencies plateauing, or strategic shifts. Overall, the company's asset turnover ratios reflect a period of improving operational efficiency, with a recent trend towards stabilization.