Signet Jewelers Ltd (SIG)

Short-term

Turnover ratios

Signet Jewelers Ltd's inventory turnover has shown some fluctuations over the past couple of years, ranging from a low of 1.58 to a high of 4.21. This ratio indicates the company's ability to manage its inventory efficiently, with higher values generally being more favorable as they suggest that Signet is selling its inventory more quickly. However, the company's inventory turnover has been volatile, which may indicate some challenges in managing inventory levels effectively.

In contrast, the receivables turnover ratio has been consistently high, reaching a peak of 383.12. This suggests that Signet Jewelers is collecting its accounts receivable very rapidly, which is a positive indicator of the company's cash flow and credit policies.

The payables turnover ratio for Signet Jewelers has also seen fluctuations, but generally remains above 5. This indicates that the company is paying its suppliers relatively quickly, which may suggest good relationships with suppliers or a focus on managing its accounts payable efficiently.

Lastly, the working capital turnover ratio reflects Signet Jewelers' efficiency in generating revenue from its working capital. The ratio has varied but generally remained above 2, indicating that the company is effectively utilizing its working capital to generate sales.

Overall, while Signet Jewelers has shown strengths in areas such as receivables turnover and working capital turnover, there are fluctuations and challenges in managing inventory levels efficiently as evidenced by the inventory turnover ratio. Monitoring and addressing these fluctuations in activity ratios can help the company improve its overall operational performance and financial health.

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Average number of days

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

Days of Inventory on Hand (DOH):
- Signet Jewelers' DOH has been fluctuating over the periods, ranging from a low of 86.77 days to a high of 231.69 days.
- A high DOH indicates that the company may be holding excess inventory, which could tie up cash and lead to higher storage costs.
- The recent trend shows a decrease in DOH from 230.75 days to 86.77 days, reflecting potential improvements in inventory management efficiency.

Days of Sales Outstanding (DSO):
- The DSO metric measures how long it takes for Signet Jewelers to collect its accounts receivable.
- The company's DSO has also varied significantly, with values ranging from 0.95 days to 20.39 days.
- A lower DSO is generally favorable as it indicates faster cash conversion and a more efficient collection process.
- Signet Jewelers' DSO has shown improvement in recent periods, declining from 20.39 days to 0.95 days, suggesting more effective credit control and quicker cash inflows.

Number of Days of Payables:
- This ratio reflects how long Signet Jewelers takes to pay its suppliers.
- The number of days of payables has shown variability, ranging from 13.92 days to 66.48 days.
- A longer payable period can indicate that the company is effectively using trade credit to manage its cash flow.
- Over the observed periods, there has been inconsistency in the payment cycle, with some fluctuations in the number of days of payables.

In conclusion, analyzing Signet Jewelers' activity ratios reveals a mixed performance in managing its inventory, receivables, and payables. The recent improvements in inventory turnover and accounts receivable collection suggest enhanced efficiency in working capital management, which could contribute to better overall financial health and performance. However, the fluctuations in payables days indicate a potential need for more consistency in managing supplier payments to optimize cash flow.

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Long-term

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate sales. Signet Jewelers Ltd's fixed asset turnover has exhibited volatility over the periods analyzed, ranging from a low of 7.84 to a high of 14.47. The latest ratio of 14.47 indicates that the company generated $14.47 in sales for every $1 of fixed assets, reflecting an efficient utilization of fixed assets.

On the other hand, total asset turnover ratio assesses the company's ability to generate sales from all its assets. Signet Jewelers Ltd's total asset turnover ratio has also shown variations, with a range from 0.77 to 1.29. The current ratio of 1.06 suggests that the company generated $1.06 in sales for each $1 of total assets, indicating a moderate efficiency in asset utilization.

Overall, the company's fixed asset turnover has been relatively higher and more stable compared to its total asset turnover, implying a more efficient use of fixed assets in generating sales. However, the total asset turnover indicates room for improvement in utilizing all assets to generate revenue effectively. It is essential for Signet Jewelers Ltd to focus on optimizing the utilization of both fixed and total assets to enhance operational efficiency and profitability.