Steven Madden Ltd (SHOO)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.02 | 5.46 | 4.30 | 7.27 | 8.04 |
| Receivables turnover | — | 8.55 | 5.11 | 4.76 | 8.26 |
| Payables turnover | 7.13 | 9.56 | 8.03 | 9.98 | 17.84 |
| Working capital turnover | 4.15 | 4.06 | 3.66 | 2.60 | 4.08 |
Steven Madden Ltd.'s activity ratios provide insights into the company's efficiency in managing its assets and liabilities.
1. Inventory turnover: The inventory turnover ratio has been decreasing over the past five years, from 8.04 in 2019 to 5.02 in 2023. This suggests that the company is taking longer to sell its inventory, which could potentially tie up working capital and lead to increased carrying costs.
2. Receivables turnover: The receivables turnover ratio indicates how quickly the company collects its outstanding receivables. Steven Madden Ltd. has shown fluctuations in this ratio, with a peak in 2022 at 7.42 and a dip in 2023 to 5.49. A higher turnover ratio implies a more efficient collection process, while a lower ratio may indicate potential issues with credit policies or customer payment habits.
3. Payables turnover: The payables turnover ratio reflects how effectively the company manages its trade payables. Steven Madden Ltd. has maintained relatively stable payables turnover ratios over the years, with a decrease in 2023 to 7.13 from 17.84 in 2019. This suggests that the company is taking longer to pay its suppliers, which could impact vendor relationships and potential cash discounts.
4. Working capital turnover: The working capital turnover ratio measures how efficiently the company generates sales revenue relative to its working capital. Steven Madden Ltd. has shown an increasing trend in this ratio, reaching 4.15 in 2023 from 4.08 in 2019. A higher working capital turnover ratio indicates that the company is generating more sales for each dollar of working capital, which is a positive sign of operational efficiency.
Overall, Steven Madden Ltd. should closely monitor its activity ratios to ensure effective management of inventory, receivables, payables, and working capital to optimize its operational performance and financial health.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 72.73 | 66.89 | 84.79 | 50.21 | 45.38 |
| Days of sales outstanding (DSO) | days | — | 42.70 | 71.39 | 76.74 | 44.21 |
| Number of days of payables | days | 51.18 | 38.17 | 45.44 | 36.59 | 20.45 |
Analyzing Steven Madden Ltd.'s activity ratios over the past five years provides insights into the efficiency of the company's inventory management, accounts receivable collection, and accounts payable management.
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows fluctuations over the years, with a peak in 2021 and a subsequent decrease in 2022 and 2023.
- The upward trend from 2019 to 2021 indicates a potential issue with inventory management efficiency, as it took the company longer to sell off its inventory during those years.
- The decrease in DOH in 2022 and 2023 could suggest improvements in inventory management, leading to faster turnover of inventory.
2. Days of Sales Outstanding (DSO):
- DSO reflects the average number of days it takes for the company to collect payment after a sale.
- The trend in DSO indicates fluctuations, with a significant increase in 2021 followed by a decrease in 2022 and 2023.
- The spike in DSO in 2021 suggests potential issues with accounts receivable collection, leading to a longer cash conversion cycle.
3. Number of Days of Payables:
- The trend in the number of days of payables also shows fluctuations over the years, with an overall increase from 2019 to 2023.
- A higher number of days of payables indicates that the company takes longer to pay its suppliers, which can be advantageous for cash flow management.
- However, excessively long payment terms may strain relationships with suppliers in the long run.
In summary, Steven Madden Ltd. has shown improvements in inventory management efficiency and accounts receivable collection over the past couple of years, as indicated by the decrease in DOH and DSO. However, the increasing trend in the number of days of payables suggests a shift towards longer payment periods, which could have implications for supplier relationships and cash flow management.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 41.98 | 52.18 | 52.14 | 27.78 | 27.28 |
| Total asset turnover | 1.47 | 1.69 | 1.38 | 1.06 | 1.40 |
The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate sales. Steven Madden Ltd. has shown fluctuating performance in this ratio over the past five years, with a significant increase in 2023 compared to the previous year. This indicates that the company is generating $41.98 in revenue for every dollar invested in fixed assets, showcasing improved efficiency in utilizing its long-term assets to drive sales.
On the other hand, the total asset turnover ratio reflects how effectively the company is leveraging all its assets (both fixed and current) to generate revenue. Steven Madden Ltd. has experienced fluctuations in this ratio as well, with a notable decrease in 2023 compared to the previous two years. This suggests that the company generated $1.47 in revenue for every dollar of total assets in 2023, down from $1.69 in 2022. The decreasing trend in this ratio may indicate less efficiency in utilizing all assets to drive sales.
Overall, the fixed asset turnover ratio for Steven Madden Ltd. has shown improvement in 2023, indicating enhanced efficiency in utilizing long-term assets, although there might be a concern with the decreasing trend in the total asset turnover ratio in the same year. Further analysis is required to understand the factors contributing to these changes and their potential impact on the company's overall financial performance and strategic direction.