Signet Jewelers Ltd (SIG)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company manages its assets and liabilities. Let's analyze the activity ratios of Signet Jewelers Ltd based on the data provided:

1. Inventory Turnover: Signet Jewelers' inventory turnover has shown a positive trend over the periods, increasing from 1.94 in May 2020 to 4.19 in February 2025. This indicates that the company has been able to sell its inventory more rapidly in recent periods, suggesting effective inventory management and potentially reducing carrying costs.

2. Receivables Turnover: The receivables turnover ratio fluctuates significantly over the periods, reaching a peak of 757.90 in May 2024. This may indicate changes in the company's credit policies or the efficiency of its collections process. A higher turnover ratio generally implies faster collection of receivables, indicating efficient management of accounts receivable.

3. Payables Turnover: The payables turnover ratio indicates how efficiently Signet Jewelers pays its suppliers. The ratio has varied over time, with a slight increasing trend from 14.13 in May 2020 to 10.59 in February 2025. A lower turnover ratio may suggest extended payment terms with suppliers, while a higher ratio could indicate prompt payment.

4. Working Capital Turnover: The working capital turnover has shown a generally increasing trend, indicating that Signet Jewelers is generating more revenue per dollar of working capital invested. This suggests effective utilization of working capital to generate sales and potentially higher profitability.

In summary, Signet Jewelers has demonstrated improvements in inventory turnover, receivables turnover, and working capital turnover over the periods, indicating efficient management of assets and liabilities. However, the variability in payables turnover may warrant further investigation into the company's payment practices and relationships with suppliers.

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Average number of days

Signet Jewelers Ltd has shown improvements in its days of inventory on hand (DOH) ratio over the analyzed period. The company reduced its DOH from 187.73 days on May 2, 2020, to 87.09 days on February 1, 2025, indicating more efficient management of inventory levels.

In terms of days of sales outstanding (DSO), Signet Jewelers Ltd experienced a significant decrease in the time it takes to collect receivables. The DSO ratio dropped from 20.39 days on August 1, 2020, to 0.78 days on February 1, 2025, pointing to improved collection practices and quicker conversion of sales into cash.

Regarding the number of days of payables, the company managed to extend its payment period from 25.83 days on May 2, 2020, to 34.48 days on February 1, 2025. This extension in payables indicates that Signet Jewelers Ltd was able to optimize its working capital management by delaying payments to suppliers while improving its liquidity position.

Overall, the trend in Signet Jewelers Ltd's activity ratios suggests better control of inventory, efficient management of receivables, and strategic management of payables over the analyzed period, contributing to enhanced operational efficiency and financial performance.

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Long-term

Signet Jewelers Ltd's long-term activity ratios, namely the fixed asset turnover and total asset turnover, reflect the efficiency of the company in utilizing its assets to generate sales revenue.

The fixed asset turnover ratio increased steadily from 8.08 in May 2020 to 14.84 in May 2024, with some fluctuations along the way. This indicates that Signet Jewelers improved its efficiency in generating sales from its fixed assets over the years. A higher fixed asset turnover ratio suggests that the company is effectively utilizing its fixed assets to generate higher sales.

On the other hand, the total asset turnover ratio increased from 0.81 in May 2020 to 1.17 in February 2025, although it displayed more fluctuations compared to the fixed asset turnover ratio. This ratio indicates how efficiently the company is using all its assets to generate sales. The rising trend in this ratio suggests that Signet Jewelers managed to improve its overall asset utilization efficiency over time.

In conclusion, the steady increase in both fixed asset turnover and total asset turnover ratios indicates that Signet Jewelers Ltd has been able to enhance its operational efficiency and optimize asset utilization, which is a positive indication of the company's long-term activity performance.