Signet Jewelers Ltd (SIG)

Short-term

Turnover ratios

Signet Jewelers Ltd's activity ratios provide insights into the efficiency of the company's operations and management of its working capital.

- Inventory turnover has been relatively stable over the past five years, indicating that the company is managing its inventory efficiently. The improvement in inventory turnover from 3.14 in 2020 to 4.21 in 2024 suggests that Signet Jewelers is selling its inventory more quickly.

- Receivables turnover has shown significant improvement over the years, from 36.79 in 2021 to 383.12 in 2024. This indicates that the company is collecting its receivables at a much faster rate, which is a positive sign of effective credit management and sales practices.

- Payables turnover has also been relatively stable, although there was a significant decrease in 2021. The increase in payables turnover from 7.98 in 2021 to 11.08 in 2024 suggests that Signet Jewelers is taking longer to pay its suppliers, which may indicate improved cash flow management.

- Working capital turnover has fluctuated over the years, but an overall increasing trend is observed from 3.26 in 2021 to 4.62 in 2024. This indicates that the company is generating more revenue for each dollar of working capital invested, reflecting efficient utilization of its resources.

Overall, the activity ratios suggest that Signet Jewelers Ltd has been improving its operational efficiency and working capital management over the years, which is a positive indicator for the company's financial health and sustainability.

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Average number of days

Signet Jewelers Ltd's activity ratios indicate the efficiency of the company's operations in managing its inventory, collecting receivables, and paying its suppliers.

1. Days of Inventory on Hand (DOH):
- Signet Jewelers' DOH has shown a decreasing trend over the past five years, with the latest figure at 86.75 days. This suggests that the company is holding less inventory on hand, which can indicate effective inventory management and turnover. However, the DOH should be compared to industry benchmarks to assess its competitiveness.

2. Days of Sales Outstanding (DSO):
- The DSO measures how quickly Signet Jewelers is collecting payments from its customers. The decreasing trend in DSO from 9.92 days in 2021 to 0.95 days in 2024 indicates efficient accounts receivable management and faster cash conversion. This may reflect effective credit policies and strong customer relationships.

3. Number of Days of Payables:
- Signet Jewelers has been consistently extending its payment periods to suppliers, as evidenced by the increasing trend in the number of days of payables from 11.37 days in 2020 to 32.93 days in 2024. This can help the company optimize cash flow and working capital management by leveraging trade credit terms.

Overall, the activity ratios suggest that Signet Jewelers Ltd has been actively managing its operational processes to improve efficiency and optimize working capital utilization. However, monitoring these ratios over time and comparing them to industry benchmarks can provide valuable insights into the company's performance and competitiveness in the market.

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Long-term

Signet Jewelers Ltd's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, have shown fluctuating trends over the past five years.

The fixed asset turnover ratio indicates the company's ability to generate sales from its investment in fixed assets. Signet Jewelers' fixed asset turnover has generally been increasing from 8.24 in 2020 to 14.47 in 2024. This suggests that the company has been more efficient in utilizing its fixed assets to generate revenue over the years.

On the other hand, the total asset turnover ratio measures the company's ability to generate sales from its total assets. Signet Jewelers' total asset turnover has been somewhat erratic, with fluctuations between 0.84 in 2021 and 1.18 in 2023. However, the ratio has slightly decreased to 1.06 in 2024. This implies that the company may have experienced some challenges in efficiently utilizing its total assets to generate revenue in the latest year.

Overall, the increasing trend in the fixed asset turnover ratio is a positive indicator of improved efficiency in utilizing fixed assets, while the fluctuations in the total asset turnover ratio indicate some variability in the company's ability to generate sales from its total asset base. Further analysis of the company's operational performance and asset management practices may be needed to fully understand these trends and their implications for Signet Jewelers' long-term financial health.