Sprouts Farmers Market LLC (SFM)

Short-term

Turnover ratios

The activity ratios of Sprouts Farmers Market LLC provide insights into how efficiently the company manages its assets and operations. Let's analyze each ratio based on the provided data:

1. Inventory Turnover:
- The inventory turnover ratio measures how effectively the company manages its inventory. A higher ratio indicates that inventory is selling quickly.
- From 2020 to 2024, the inventory turnover ratio gradually decreased from 16.09 to 13.92. This suggests that the company took longer to sell its inventory over the years, potentially indicating issues with inventory management or slowing sales.

2. Receivables Turnover:
- Receivables turnover ratio assesses how efficiently the company collects payments from customers. A higher ratio indicates faster collection.
- The data shows that receivables turnover data is missing for all years, making it impossible to assess how effectively the company collects payments from customers.

3. Payables Turnover:
- Payables turnover ratio evaluates how efficiently the company pays its suppliers. A higher ratio suggests that the company pays its suppliers quickly.
- Similar to receivables turnover, payables turnover data is not provided, so we cannot evaluate how efficiently Sprouts Farmers Market LLC manages its payables.

4. Working Capital Turnover:
- Working capital turnover ratio measures how well a company utilizes its working capital to generate sales revenue. A higher ratio indicates more efficient use of working capital.
- In 2020, there is no data provided. However, from 2021 to 2024, the working capital turnover ratio fluctuated significantly, with the highest value recorded in 2023 at 120.16. This indicates that the company effectively utilized its working capital to generate sales, showing strong efficiency in capital management during that year.

Overall, the analysis of Sprouts Farmers Market LLC's activity ratios suggests mixed performance in managing its assets and operations. The decrease in inventory turnover may require closer attention, whereas the fluctuating working capital turnover indicates variability in utilizing working capital efficiently over the years. The absence of data for receivables and payables turnover limits a comprehensive assessment of the company's overall efficiency in managing its accounts receivable and accounts payable.

---

Average number of days

The Days of Inventory on Hand (DOH) for Sprouts Farmers Market LLC have shown an increasing trend over the years, starting at 22.69 days on December 31, 2020, and reaching 26.23 days on December 31, 2024. This indicates that the company is taking longer to sell its inventory, which may tie up more capital and could potentially lead to increased carrying costs.

The Days of Sales Outstanding (DSO) and Number of Days of Payables data are not available for analysis, as they are listed as "— days" for all the years provided. Without this information, it is challenging to evaluate the company's efficiency in collecting receivables and managing payables.

In conclusion, Sprouts Farmers Market LLC's increasing Days of Inventory on Hand may suggest a need to monitor its inventory management practices to optimize working capital and improve overall operational efficiency. Further insight into the company's DSO and payables turnover would provide a more comprehensive assessment of its activity ratios.

---

Long-term

Sprouts Farmers Market LLC's Fixed Asset Turnover ratio indicates that for the years 2020, 2021, and 2022, the company generated sales of $8.90, $8.52, and $8.87, respectively, for every dollar invested in fixed assets. A higher Fixed Asset Turnover ratio is generally preferable as it suggests that the company is using its fixed assets efficiently to generate revenue.

In terms of Total Asset Turnover, the company's performance decreased from 2.31 in 2020 to 2.09 in 2021 and 2022, before experiencing a slight recovery to 2.12 in 2024. This ratio signifies that for each dollar of total assets held by the company, it generated sales of $2.31 in 2020, $2.09 in 2021 and 2022, and $2.12 in 2024.

Overall, while the Fixed Asset Turnover ratio remained relatively stable over the years analyzed, the Total Asset Turnover decreased initially before showing a slight improvement in the most recent year. This suggests that Sprouts Farmers Market LLC may have faced challenges in efficiently utilizing its total assets to generate sales, but the recent improvement indicates that the company may be addressing this issue.