Boston Beer Company Inc (SAM)

Short-term

Turnover ratios

The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times during a period the company sells and replaces its inventory. Boston Beer Company Inc's inventory turnover ratio has been consistently increasing over the past five years, highlighting an improvement in its inventory management efficiency.

The receivables turnover ratio evaluates how efficiently a company collects its accounts receivable by indicating how many times a company collects its average accounts receivable balance during a period. Boston Beer Company Inc's receivables turnover ratio has shown fluctuations but has remained relatively high, suggesting the company is efficient in collecting payments from its customers.

The payables turnover ratio measures how efficiently a company manages its accounts payable by assessing how many times during a period the company pays off its suppliers. Boston Beer Company Inc's payables turnover ratio has also fluctuated but overall demonstrates a relatively consistent trend, indicating the company's effectiveness in managing its payables.

The working capital turnover ratio assesses how efficiently a company utilizes its working capital to generate sales revenue. Boston Beer Company Inc's working capital turnover ratio has shown variations over the years, with a notable decline in recent periods. This trend may indicate a decrease in the company's efficiency in utilizing its working capital to generate sales.

Overall, Boston Beer Company Inc's activity ratios show an improvement in inventory and receivables management efficiency. However, there are fluctuations in payables turnover and a decline in working capital turnover, which may warrant further analysis to understand the underlying factors influencing these trends.

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Average number of days

Boston Beer Company Inc's activity ratios indicate the efficiency with which the company manages its inventory, collects receivables, and pays its bills.

1. Days of Inventory on Hand (DOH):
- The DOH has been gradually improving over the years, decreasing from 60.89 days in 2019 to 36.55 days in 2023. This decrease suggests that the company is managing its inventory more effectively, holding less inventory on hand to generate sales.

2. Days of Sales Outstanding (DSO):
- The DSO measures how quickly the company collects its accounts receivable. The trend shows fluctuations, but there's generally a slight improvement in 2023 with a DSO of 12.49 days compared to 18.65 days in 2019. This indicates that Boston Beer is collecting its receivables faster.

3. Number of Days of Payables:
- The number of days of payables remaining stable around 25-27 days over the past few years indicates that the company maintains consistent payment practices with its suppliers. A shorter period of payables can potentially strain cash flow, while a longer period can indicate favorable working capital management.

Overall, the trend in these activity ratios suggests that Boston Beer Company Inc is becoming more efficient in managing its working capital, inventory, and receivables, which may lead to improved liquidity and profitability in the future.

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Long-term

The long-term activity ratios of Boston Beer Company Inc, specifically the fixed asset turnover and total asset turnover, have exhibited a positive trend over the past five years.

In terms of fixed asset turnover, the company's efficiency in generating sales from its fixed assets has shown improvement, with a consistent ratio above 2.5 in the last three years and reaching 3.13 in 2023. This indicates that Boston Beer has been effectively utilizing its investments in long-term assets to drive revenue growth.

Similarly, the total asset turnover ratio has also demonstrated an increasing trend, from 1.19 in 2019 to 1.40 in 2023. This suggests that the company has been successful in leveraging its total assets to generate higher sales. The improvement in this ratio indicates improved efficiency in asset utilization and overall operating performance.

Overall, the steady increase in both fixed asset turnover and total asset turnover ratios reflects Boston Beer Company's ability to efficiently manage its long-term assets and effectively generate revenue from its asset base. This positive trend in long-term activity ratios indicates operational efficiency and effectiveness in utilizing the company's long-term resources to drive sales growth.