Pilgrims Pride Corp (PPC)

Short-term

Turnover ratios

Pilgrims Pride Corp's activity ratios provide insights into the efficiency of the company's operations in managing its inventory, receivables, payables, and working capital.

1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory during a specific period. Higher ratios indicate efficient inventory management. Pilgrims Pride Corp's inventory turnover has shown fluctuation over the past five years, ranging from 8.19 to 9.26. This suggests that the company has generally been effective in managing its inventory levels and turning over its goods.

2. Receivables Turnover:
- The receivables turnover ratio evaluates how efficiently a company collects on its credit sales. A higher ratio indicates quicker collection of receivables. Pilgrims Pride Corp's receivables turnover has ranged from 14.45 to 17.82 over the past five years. This indicates that the company has generally been successful in collecting payments from customers within a reasonable timeframe.

3. Payables Turnover:
- The payables turnover ratio illustrates how well a company manages its payments to suppliers. A higher ratio suggests the company is paying its suppliers more quickly. Pilgrims Pride Corp's payables turnover has fluctuated between 10.27 and 12.75 over the analyzed period. This indicates that the company has been managing its payables efficiently while also maintaining good relationships with suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio measures how effectively a company uses its working capital to generate revenue. A higher ratio indicates better utilization of working capital. Pilgrims Pride Corp's working capital turnover has decreased from 16.00 to 6.97 over the last five years, suggesting a decline in the company's ability to generate revenue using its working capital efficiently.

Overall, Pilgrims Pride Corp has generally demonstrated efficient management of inventory and receivables, as indicated by the inventory turnover and receivables turnover ratios. However, a decreasing trend in working capital turnover raises concerns about the company's effectiveness in utilizing its working capital to drive revenue growth over the analyzed period.

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Average number of days

The activity ratios of Pilgrims Pride Corp, as reflected by its inventory turnover, accounts receivable turnover, and accounts payable turnover, provide insights into the efficiency of the company's operations and management of working capital.

1. Days of Inventory on Hand (DOH):
- The trend in DOH indicates the number of days it takes for the company to sell its inventory. A decreasing trend in DOH from 2020 to 2024 (41.78 to 39.61 days) suggests improved inventory management and faster turnover of inventory. However, there was a slight increase in 2022 and 2023, indicating a temporary slowdown in inventory turnover.

2. Days of Sales Outstanding (DSO):
- DSO reflects the average number of days it takes the company to collect its accounts receivable. The decreasing trend in DSO over the years (22.58 to 20.48 days) indicates that the company has been collecting payments from customers more efficiently. A lower DSO is generally positive as it signifies quicker cash conversion.

3. Number of Days of Payables:
- The number of days of payables signifies how long the company takes to pay its suppliers. A decreasing trend in this ratio (31.63 to 28.83 days) indicates that the company has been managing its payables more efficiently over the years, potentially improving relationships with suppliers and reducing the need for short-term borrowing.

Overall, the decreasing trends in DOH, DSO, and the number of days of payables suggest that Pilgrims Pride Corp has become more efficient in managing its working capital and operations, leading to improved cash flow and potentially higher profitability. It is important for the company to continue monitoring and optimizing these ratios to maintain its operational efficiency and financial health.

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Long-term

The fixed asset turnover ratio of Pilgrims Pride Corp has shown an increasing trend from 4.51 in 2020 to 5.70 in 2024. This indicates that the company is generating more revenue from its fixed assets over the years, which is a positive sign of operational efficiency.

On the other hand, the total asset turnover ratio of the company has fluctuated during this period, with a peak of 1.87 in 2022 and a low of 1.61 in 2020. The ratio decreased slightly to 1.68 in 2024. This suggests that the company's ability to generate sales from its total assets has been somewhat inconsistent.

Overall, the increasing trend in the fixed asset turnover ratio reflects the company's effective utilization of its fixed assets to generate revenue, while the fluctuation in the total asset turnover ratio may indicate varying efficiency in generating sales from all assets. Further analysis is recommended to understand the reasons behind these fluctuations and to assess the company's long-term operational performance.