Ralph Lauren Corp Class A (RL)

Short-term

Turnover ratios

The activity ratios of Ralph Lauren Corp A provide insights into how efficiently the company manages its operations related to inventory, receivables, payables, and working capital turnover.

1. Inventory Turnover: The inventory turnover ratio measures how many times a company sells its inventory during a specific period. Ralph Lauren Corp A's inventory turnover has fluctuated over the years, with a range between approximately 1.76 to 2.44. A higher inventory turnover indicates that the company is selling its goods more frequently, which can be positive for liquidity and reducing holding costs.

2. Receivables Turnover: The receivables turnover ratio reflects how quickly a company collects its accounts receivable. Ralph Lauren Corp A's receivables turnover has shown variability, ranging from around 8.56 to 15.41, indicating fluctuations in how quickly the company collects payments from its customers. A higher turnover ratio suggests effective credit management and timely collection of receivables.

3. Payables Turnover: The payables turnover ratio measures how quickly a company pays its suppliers. Ralph Lauren Corp A's payables turnover has ranged from approximately 3.83 to 6.62, indicating the company's payment pattern to suppliers. A higher turnover ratio may suggest more efficient use of trade credit and better cash flow management.

4. Working Capital Turnover: The working capital turnover ratio evaluates how efficiently a company utilizes its working capital to generate sales. Ralph Lauren Corp A's working capital turnover has shown improvement over time, with values ranging from 1.69 to 4.46. A higher ratio suggests that the company is effectively using its working capital to support sales growth and operational activities.

Overall, analyzing these activity ratios helps in assessing Ralph Lauren Corp A's operational efficiency, inventory management, receivables collection, payables management, and working capital utilization, providing valuable insights into the company's performance in these key areas.

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Average number of days

Based on the provided data, let's analyze the activity ratios of Ralph Lauren Corp Class A:

1. Days of Inventory on Hand (DOH):
- The DOH shows the number of days a company holds inventory before selling it. Ralph Lauren's DOH ranged from 132.04 days to 207.40 days over the period.
- The trend indicates some fluctuations in inventory management efficiency, with peaks and troughs observed.
- A decreasing trend in DOH from March 31, 2024 (149.71 days) to March 31, 2025 (155.70 days) suggests potential improvement in inventory turnover.

2. Days of Sales Outstanding (DSO):
- DSO measures the average number of days it takes for a company to collect revenue after a sale is made. Ralph Lauren's DSO varied from 12.07 days to 42.62 days.
- There was a notable increase in DSO from September 30, 2020 (27.46 days) to December 31, 2020 (42.62 days), indicating a potential issue with timely revenue collection.
- However, the DSO trend improved over time, with a decrease from March 31, 2024 (30.88 days) to March 31, 2025 (23.69 days), suggesting better management of accounts receivable.

3. Number of Days of Payables:
- This ratio reflects how long a company takes to pay its suppliers. Ralph Lauren's payables days ranged from 24.63 days to 95.34 days.
- Fluctuations in payables days were observed over time, with some periods showing longer delays in payment to suppliers.
- A notable decreasing trend in payables days from June 30, 2022 (95.34 days) to March 31, 2025 (71.49 days) indicates potential efforts to manage payables more efficiently.

Overall, analyzing these activity ratios provides insights into Ralph Lauren's management of inventory, receivables, and payables. It is important for the company to maintain efficient inventory turnover, improve collection of receivables, and effectively manage payables to optimize its working capital and financial performance in the long run.

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Long-term

The fixed asset turnover ratio measures how efficiently a company generates sales revenue from its investment in fixed assets. For Ralph Lauren Corp Class A, this ratio has shown fluctuations over the analyzed periods. It was relatively high at the end of 2021 and the beginning of 2022, indicating that the company was generating significant sales from its fixed assets during those times. However, there was a notable decline in the ratio in March 2023, which suggests a decrease in sales relative to the investment in fixed assets.

On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from its total assets. Ralph Lauren Corp Class A's total asset turnover ratio has generally been increasing over the analyzed periods. This indicates that the company has been more effective in utilizing its total assets to generate revenue, with a notable improvement from mid-2023 onwards.

Overall, the trends in both the fixed asset turnover ratio and the total asset turnover ratio suggest that Ralph Lauren Corp Class A has been making improvements in its asset utilization efficiency, particularly in generating sales from its total assets. However, the decreasing trend in the fixed asset turnover ratio in recent periods may warrant further investigation to understand the underlying factors impacting the company's sales generation from its fixed assets.