RH (RH)
Activity ratios
Short-term
Turnover ratios
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.95 | 3.94 | 4.14 | 4.79 | 5.47 |
| Receivables turnover | 35.97 | 44.27 | 55.33 | 38.03 | 52.37 |
| Payables turnover | 14.55 | 18.09 | 12.14 | 11.09 | 13.29 |
| Working capital turnover | 12.38 | 2.18 | 1.81 | — | — |
The inventory turnover ratio for RH has been relatively stable over the past five years, ranging from 3.94 to 5.47. This indicates that RH is efficiently managing its inventory, with a higher turnover ratio suggesting faster inventory sales.
The receivables turnover ratio has shown some fluctuations over the same period, with a peak in 2022 at 55.33 and a low in 2023 at 44.27. This ratio indicates how efficiently the company is collecting payment from customers, and a higher turnover ratio suggests that RH is collecting payments more quickly.
On the other hand, the payables turnover ratio has also varied over the years, with a peak in 2019 at 18.09 and a low in 2022 at 12.14. A higher payables turnover ratio typically indicates that RH is paying its suppliers more quickly.
Finally, the working capital turnover ratio has shown significant improvement from 2019 to 2024, increasing from 2.18 to 12.38. This ratio reflects how effectively RH is using its working capital to generate revenue. However, data for 2021 is not available, which limits a comprehensive analysis for that year.
Average number of days
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 92.38 | 92.55 | 88.25 | 76.12 | 66.67 |
| Days of sales outstanding (DSO) | days | 10.15 | 8.25 | 6.60 | 9.60 | 6.97 |
| Number of days of payables | days | 25.09 | 20.18 | 30.07 | 32.90 | 27.47 |
Days of inventory on hand (DOH) measures how many days it takes for a company to sell its inventory. RH's DOH has been increasing over the years, indicating that their inventory turnover has been slowing down. This could suggest inefficiencies in managing inventory or possibly a decline in sales.
Days of sales outstanding (DSO) reflects the average number of days it takes for a company to collect its accounts receivable. RH's DSO has fluctuated over the years but has generally been at a low level, indicating that the company is efficient in collecting payments from customers.
Number of days of payables shows how long a company takes to pay its suppliers. RH's days of payables have been fluctuating but have generally remained relatively stable. A higher number of days of payables may suggest that the company has better liquidity as it delays payments to suppliers.
Overall, an increase in DOH and stable DSO and days of payables could indicate potential liquidity issues and operational inefficiencies in managing inventory or paying suppliers promptly. Monitoring and analyzing these ratios regularly can provide insights into RH's working capital management and operational efficiency.
See also:
RH Short-term (Operating) Activity Ratios
Long-term
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 1.68 | 2.16 | 2.99 | 2.58 | 2.65 |
| Total asset turnover | 0.68 | 0.67 | 0.66 | 0.96 | 1.05 |
Long-term activity ratios such as the fixed asset turnover and total asset turnover provide insights into how efficiently a company is utilizing its assets to generate sales revenue.
The fixed asset turnover ratio for RH has been declining over the years, from 2.65 in 2020 to 1.68 in 2024. This suggests that the company is generating less revenue from its fixed assets in recent years, indicating a decrease in the efficiency of utilizing its long-term assets to generate sales.
On the other hand, the total asset turnover ratio has fluctuated over the years, ranging from 0.66 in 2022 to 1.05 in 2020. This ratio indicates how well the company is utilizing all of its assets to generate sales. The fluctuation in this ratio may be due to changes in the company's asset base and sales volume over time.
Overall, the declining trend in fixed asset turnover and the fluctuating pattern in total asset turnover suggest that RH may need to reevaluate its asset utilization strategies to improve efficiency and generate higher sales from its assets in the long term.