Sally Beauty Holdings Inc (SBH)
Activity ratios
Short-term
Turnover ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.49 | 3.75 | 3.97 | 4.01 | 3.60 |
| Receivables turnover | 109.30 | 108.66 | 115.78 | 95.97 | 87.61 |
| Payables turnover | 13.16 | 12.72 | 11.88 | 13.81 | 12.30 |
| Working capital turnover | 5.63 | 7.98 | 5.26 | 3.93 | 5.34 |
Sally Beauty Holdings Inc's activity ratios provide insights into the efficiency of the company's operations. The inventory turnover has declined from 2.03 in 2022 to 1.88 in 2023, indicating a longer time taken to sell inventory. This may raise concerns about obsolescence or potential overstocking.
Conversely, the receivables turnover has been consistently high, reaching 49.14 in 2023, reflecting the company's ability to collect outstanding receivables quickly. However, the decreasing trend in receivables turnover from 2019 to 2023 suggests a lengthening collection period, which may impact cash flow.
The payables turnover has shown a slight increase from 6.88 in 2022 to 7.07 in 2023, implying that the company is taking longer to pay its suppliers. This may indicate a potential strain on vendor relationships or a deliberate extension of payment terms.
Moreover, the working capital turnover has fluctuated over the years, with a significant decrease in 2022 followed by a recovery in 2023. This reflects the company's ability to generate revenue relative to its working capital, with a higher turnover ratio indicating more effective utilization of working capital.
Overall, while the high receivables turnover is a positive indicator of cash collection efficiency, the declining inventory turnover and fluctuating working capital turnover warrant attention, suggesting potential challenges in managing inventory and working capital effectively. This analysis underscores the need for the company to closely monitor its operational processes to improve overall activity efficiency.
Average number of days
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 104.47 | 97.45 | 91.84 | 91.07 | 101.43 |
| Days of sales outstanding (DSO) | days | 3.34 | 3.36 | 3.15 | 3.80 | 4.17 |
| Number of days of payables | days | 27.73 | 28.70 | 30.74 | 26.42 | 29.66 |
Sally Beauty Holdings Inc's activity ratios provide insights into its inventory management, accounts receivable collection, and accounts payable payment periods.
1. Days of Inventory on Hand (DOH):
The DOH measures how efficiently the company manages its inventory. Over the past five years, Sally Beauty's DOH has increased, indicating that its inventory turnover has slowed. The rising trend suggests that the company may be holding excess inventory or facing challenges in selling its products.
2. Days of Sales Outstanding (DSO):
This ratio reflects the average number of days it takes for Sally Beauty to collect payments for its sales. The DSO has fluctuated over the years, with a slight increase in the most recent period. This may indicate a potential challenge in collecting receivables efficiently, which could impact the company's cash flow.
3. Number of Days of Payables:
The days of payables measure how long it takes for the company to pay its suppliers. Sally Beauty's payables period has been relatively stable over the past five years, with a slight increase in the most recent period. This may suggest that the company is taking slightly longer to settle its payables.
Overall, the trend in these activity ratios indicates that Sally Beauty Holdings Inc may be experiencing challenges in managing its inventory, collecting receivables, and/or settling payables, which could impact its working capital management and overall operational efficiency.
Long-term
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 12.27 | 12.44 | 12.29 | 10.84 | 11.82 |
| Total asset turnover | 1.34 | 1.44 | 1.33 | 1.18 | 1.80 |
The long-term activity ratios for Sally Beauty Holdings Inc indicate the efficiency of the company's utilization of its fixed assets and total assets over the past five years.
The fixed asset turnover ratio measures how effectively the company generates sales from its investment in fixed assets. Sally Beauty's fixed asset turnover ratio has been consistently high, indicating that the company generates significant sales relative to its investment in fixed assets. The slight decrease from 2022 to 2023 may indicate a potential decrease in the efficiency of utilizing fixed assets to generate sales, which could warrant further investigation.
The total asset turnover ratio measures the company's ability to generate sales from its total assets. The ratio has shown some variability over the past five years, with a significant decline in 2020 followed by a recovery in 2021. The overall trend shows a decrease in 2023 compared to 2022, indicating a potential decrease in the efficiency of generating sales from the company's total assets.
In summary, while the fixed asset turnover ratio has remained consistently high, the total asset turnover ratio has shown more variability. Management should closely monitor these ratios to ensure optimal utilization of assets for generating sales.