Scholastic Corporation (SCHL)

Short-term

Turnover ratios

The activity ratios of Scholastic Corporation over the period from May 2021 to May 2025 reveal noteworthy developments in inventory management, receivables collection, payables payment practices, and overall working capital utilization.

Inventory Turnover: The ratio experienced some fluctuations during the period. Starting at 2.47 in May 2021, it increased to 2.72 in May 2022, indicating a modest improvement in inventory management. However, it dipped slightly to 2.35 in May 2023 before rising again to 2.67 in May 2024. By May 2025, the inventory turnover improved further to 3.14, suggesting enhanced efficiency in inventory utilization and quicker inventory turnover rates compared to earlier years.

Receivables Turnover: This ratio consistently improved over the period, increasing from 3.77 in May 2021 to 5.94 in May 2023, and reaching 6.35 in May 2024. Although there was a slight decrease to 5.95 by May 2025, the overall trend indicates an increase in the efficiency of collecting receivables, reflecting possibly stricter credit policies or improved receivables management.

Payables Turnover: The ratio remained relatively stable throughout the period. It was 4.83 in May 2021, marginally decreased to 4.72 in May 2022, further declined slightly to 4.60 in May 2023, then increased to 5.09 in May 2024, before slightly decreasing again to 4.99 in May 2025. This indicates a relatively consistent approach to paying suppliers, with some fluctuations likely reflecting changes in payment terms or supplier relationships.

Working Capital Turnover: The most pronounced trend is observed in this ratio, which shows a significant and steady increase over the years. From 3.91 in May 2021, the ratio rose to 4.37 in May 2022, then to 7.78 in May 2023, followed by a substantial jump to 11.18 in May 2024, and reaching 16.44 in May 2025. This trend suggests increasingly efficient utilization of working capital to generate sales, reflecting improvements in operational efficiency, better cash flow management, or increased sales relative to working capital investments.

Overall, the data demonstrates a positive trajectory in Scholastic Corporation's operational efficiency regarding inventory management, receivables collection, and working capital utilization. The steady increase in working capital turnover highlights a strategic focus on optimizing resources to generate higher sales, while improved receivables turnover indicates effective credit management. Slight fluctuations in inventory and payables ratios reflect operational adjustments but do not detract from the overall trend of enhanced activity efficiency.

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Average number of days

The activity ratios of Scholastic Corporation reflect notable trends over the period from May 2021 to May 2025, specifically in inventory management, receivables collection, and payables management.

Days of Inventory on Hand (DOH):
The DOH metric indicates the average number of days inventory remains unsold. In May 2021, the company held inventory for approximately 147.70 days. This period decreased to 134.18 days in May 2022, suggesting an improvement in inventory turnover and more efficient inventory management. However, in May 2023, the DOH increased to 155.25 days, signaling a slowdown in inventory turnover or possible overstocking. Subsequently, the period decreased again to 136.76 days in May 2024 and further declined to 116.41 days in May 2025, indicating a consistent improvement in inventory efficiency and a shorter holding period for inventory.

Days of Sales Outstanding (DSO):
The DSO reveals the average number of days the company takes to collect receivables. From May 2021 through May 2025, Scholastic’s DSO has generally decreased from 96.81 days to 61.39 days. This downward trend demonstrates enhanced efficiency in receivables collection practices over the years. The reduction from 96.81 days to around 61 days suggests the company has been able to accelerate cash inflows, which is favorable for liquidity and cash flow management.

Number of Days of Payables:
This ratio indicates the average period Scholastic takes to settle its payables. The data shows a relatively stable trend, with days payable fluctuating slightly: 75.57 days in May 2021, increasing slightly to 77.39 days in 2022, then to 79.32 days in 2023. A decrease occurred in May 2024 to 71.70 days, with a modest increase back to 73.19 days in May 2025. Overall, the company's payables management appears consistent, with a slight tendency to extend payment periods, which could be used to optimize working capital.

Summary:
Over the analyzed period, Scholastic Corporation has demonstrated improvement in inventory turnover, especially from 2023 onward, as evidenced by the declining DOH. The receivables management has also become more efficient, with DSO reducing steadily. Payables management remains relatively stable, with slight fluctuations that suggest an attempt to optimize payment timing without straining supplier relationships. These activity ratio trends collectively indicate a move towards enhanced operational efficiency and better working capital management over the observed timeframe.

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Long-term

The analysis of Scholastic Corporation's long-term activity ratios indicates a general trend of increasing efficiency in asset utilization over the period from May 31, 2021, to May 31, 2023. Specifically, the fixed asset turnover ratio improved from 2.05 in 2021 to 3.27 in 2023. This upward trajectory suggests that the company has been increasingly effective in generating sales from its investments in fixed assets, reflecting potential enhancements in operational efficiency, asset management practices, or sales volume relative to fixed assets.

Similarly, the total asset turnover ratio demonstrated consistent growth over the same period, rising from 0.65 in 2021 to 0.91 in 2023. This increase signifies an improved overall efficiency in utilizing total assets to generate sales, possibly attributable to better management of current and long-term assets or strategic shifts in asset deployment.

Between 2022 and 2023, both ratios exhibit notable increases: the fixed asset turnover advances from 3.18 to 3.27, and the total asset turnover from 0.85 to 0.91, indicating a sustained and potentially accelerating enhancement in asset efficiency.

Forecast data for 2024 and 2025 is unavailable or unreported, leaving the trend beyond 2023 indeterminate. Nonetheless, the historical data suggests that Scholastic Corporation has experienced a positive trend in optimizing its asset base for revenue generation, aligning with improved operational efficiency. However, since the ratios have approached a relatively high level—particularly the fixed asset turnover nearing 3.3—future improvements may face diminishing returns unless accompanied by further asset management refinements or sales growth initiatives.