Scholastic Corporation (SCHL)

Short-term

Turnover ratios

Scholastic Corporation's activity ratios provide insights into the efficiency of its operations and management of working capital. The inventory turnover ratio has shown a consistent improvement over the past five years, indicating that the company is managing its inventory more effectively. This suggests that Scholastic is selling its inventory at a faster rate, which could lead to reduced carrying costs and potential obsolescence.

Similarly, the receivables turnover ratio has also increased steadily over the years, reflecting the company's effectiveness in collecting outstanding receivables from customers. This implies that Scholastic is efficiently managing its accounts receivable and converting credit sales into cash in a timely manner.

The payables turnover ratio has been relatively stable over the years, indicating that Scholastic is taking an average of 11.52, 9.35, 9.59 days to pay its trade payables. A higher payables turnover ratio suggests that the company is managing its payables efficiently and potentially taking advantage of trade credit terms.

Lastly, the working capital turnover ratio has shown a significant improvement over the years, indicating that Scholastic is generating more revenue per dollar of working capital invested. This suggests that the company is utilizing its working capital more efficiently to generate sales revenue.

Overall, Scholastic Corporation's activity ratios indicate a positive trend in operational efficiency and working capital management, which could potentially lead to improved financial performance in the future.

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Average number of days

The activity ratios for Scholastic Corporation reflect the efficiency of its operations in managing inventory, collecting receivables, and paying its suppliers over the past five years.

1. Days of Inventory on Hand (DOH):
- The company has shown fluctuations in its efficiency in managing inventory levels over the years.
- The trend indicates that in 2024, Scholastic reduced the number of days of inventory on hand to 60.45 days, which is an improvement compared to 2023 (76.42 days) and 2021 (74.41 days).
- The decrease in DOH in 2024 suggests that the company may have implemented better inventory management practices to reduce holding costs and improve cash flows.

2. Days of Sales Outstanding (DSO):
- The DSO ratio represents how long it takes for the company to collect its accounts receivable.
- Scholastic Corporation has shown a decreasing trend in DSO over the years, indicating an improvement in its collection process.
- In 2024, the DSO decreased to 57.52 days, which is a positive sign compared to 2021 and 2022 where the DSO was higher.

3. Number of Days of Payables:
- The days of payables indicate the average number of days it takes the company to pay its suppliers.
- Over the past five years, Scholastic has maintained a relatively stable number of days of payables.
- The number of days of payables decreased slightly in 2024 to 31.69 days, indicating that the company may be managing its payables more effectively than in previous years.

In conclusion, Scholastic Corporation has made improvements in inventory management and accounts receivable collection efficiency, as evidenced by the decreasing trends in DOH and DSO ratios. Additionally, the stable number of days of payables suggests a consistent approach to managing supplier payments. These trends indicate that the company is focusing on optimizing its working capital and operational efficiency.

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Long-term

The long-term activity ratios of Scholastic Corporation provide insights into how efficiently the company is utilizing its assets to generate sales revenue over the years.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures the company's ability to generate sales revenue in relation to its investment in fixed assets.
- Scholastic Corporation has shown a consistent improvement in its fixed asset turnover from 2020 to 2023, indicating that the company has been more efficient in utilizing its fixed assets to generate sales.
- The decrease in 2024 compared to 2023 may suggest a slight decrease in efficiency in the utilization of fixed assets, though the ratio remains relatively high.
- Overall, the company has maintained a healthy fixed asset turnover ratio, reflecting effective management of its fixed assets to drive sales.

2. Total Asset Turnover:
- The total asset turnover ratio assesses how efficiently the company is using all its assets to generate sales.
- Scholastic Corporation has demonstrated a favorable trend in total asset turnover, with steady improvement from 2020 to 2023, indicating increasing efficiency in utilizing its total assets to generate sales.
- The notable increase in 2024 compared to the previous year further highlights the company's enhanced ability to generate sales relative to its total asset base.
- The rising trend in total asset turnover suggests that Scholastic Corporation has been successful in optimizing its asset utilization to drive revenue growth.

In conclusion, the analysis of Scholastic Corporation's long-term activity ratios reveals that the company has exhibited positive improvements in both fixed asset turnover and total asset turnover over the years. These trends indicate efficient management of assets and effective utilization to drive sales revenue, showcasing the company's ability to generate returns on its asset investments.