JM Smucker Company (SJM)

Short-term

Turnover ratios

The provided activity ratios for JM Smucker Company over the specified periods reveal patterns in inventory management, receivables collection, payables utilization, and overall working capital efficiency.

Inventory Turnover:
The inventory turnover ratio exhibits fluctuations over the observed years. It decreased slightly from 5.07 in April 2021 to 4.86 in April 2022, indicating a marginal slowdown in inventory sales or accumulation. By April 2023, it increased to 5.67, reflecting an improved efficiency in converting inventory into sales. However, this upward trend was not sustained, as in April 2024, the ratio declined again to 4.87, and further decreased to 4.42 by April 2025. The variations suggest periods of efficient inventory management interspersed with moments of slower inventory turnover, possibly influenced by seasonal factors or strategic inventory adjustments.

Receivables Turnover:
This ratio remained relatively stable, with minor fluctuations. It increased slightly from 14.99 in April 2021 to 15.24 in April 2022, indicating consistent collection efforts. Subsequently, it experienced a slight decline to 14.27 in April 2023, followed by a significant drop to 11.10 in April 2024, suggesting a delay in receivables collection or extended credit terms. By April 2025, the ratio rebounded to 14.10, nearly returning to earlier levels. These changes may reflect operational adjustments in credit policy or shifts in customer payment behaviors.

Payables Turnover:
The payables turnover ratio shows a gradual decreasing trend from 4.70 in April 2021 to 4.11 in April 2023, indicating that the company was taking longer to settle its payables, potentially utilizing extended credit terms. A decline continued to 3.79 in April 2024, before a slight increase to 4.14 in April 2025, implying a slight tightening or normalization of payables settlement practices.

Working Capital Turnover:
The working capital turnover ratio data is available only for April 2022 and April 2023. It was notably high at 139.60 in 2022, indicating a very efficient utilization of working capital in generating sales. By 2023, it decreased significantly to 9.78, which could suggest a reduction in sales relative to working capital, an increase in working capital levels, or both. The absence of data for subsequent periods limits a comprehensive trend analysis, but the sharp decline between these two periods indicates a substantial change in working capital management efficiency.

Summary:
Overall, JM Smucker's activity ratios reflect operational adjustments over the years. Inventory turnover improvements in 2023 demonstrate enhanced inventory management, while fluctuations in receivables and payables ratios indicate strategic or operational shifts in credit and supplier relationships. The high working capital turnover in 2022 suggests efficient capital utilization during that period, with a notable decline in 2023 pointing to potential changes in sales volume or working capital policies.

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Average number of days

The activity ratios of JM Smucker Company, specifically the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables, indicate shifts in operational efficiency and working capital management over the analyzed period from April 2021 to April 2025.

Days of Inventory on Hand (DOH):
The company experienced fluctuations in inventory management. The DOH increased from 72.03 days in April 2021 to a peak of 75.04 days in April 2022, suggesting a slight accumulation of inventory during that period. Subsequently, the ratio decreased notably to 64.35 days in April 2023, indicating improved inventory turnover and more efficient inventory management. However, this was followed by an increase to 74.89 days in April 2024 and further to 82.64 days in April 2025, reflecting a trend toward higher inventory levels. The overall pattern suggests periods of improved inventory efficiency interspersed with phases of inventory build-up.

Days of Sales Outstanding (DSO):
The DSO remained relatively stable from April 2021 through April 2023, hovering around 24–25 days, which indicates consistent credit and collection policies. In April 2024, DSO increased to 32.87 days, suggesting a longer collection cycle possibly due to changes in credit terms or customer payment behaviors. By April 2025, DSO decreased slightly to 25.89 days, returning to levels comparable to earlier years. This fluctuation reflects periods of tighter or more lenient receivables management.

Number of Days of Payables:
The company’s days payable ratio increased steadily from 77.60 days in April 2021 to 88.75 days in April 2023, signaling an extension in the period before settling payables, possibly as a strategic cash management approach to optimize working capital. The ratio peaked at 96.32 days in April 2024, indicating an even more prolonged payables cycle. By April 2025, it decreased slightly to 88.06 days, aligning closer to earlier levels but still reflecting a relatively extended payables period compared to 2021.

Summary:
Overall, the activity ratios suggest that JM Smucker Company has experienced periods of enhanced operational efficiency, such as the reduction in DOH in April 2023, alongside periods of deliberate extension in working capital components, like increased days of payables in 2024. The fluctuations in DSO also point to evolving credit terms or collection efficiencies. The general trend shows a strategic balancing act between inventory management, receivables, and payables to optimize liquidity, although recent years have seen increased inventory and payables periods, which may impact cash flow management and liquidity levels.

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Long-term

The analysis of JM Smucker Company's long-term activity ratios reveals insights into the company's efficiency in utilizing its assets over the indicated periods. The Fixed Asset Turnover ratio, which measures how effectively the company generates sales from its fixed assets, shows a slight decline from 4.00 times in April 2021 to 3.75 times in April 2022, followed by a modest increase to 3.81 times in April 2023. The fluctuation indicates a relatively stable but slightly variable utilization of fixed assets; the decrease could suggest less efficient use or increased investment in fixed assets without immediate proportional sales growth, while the subsequent increase suggests a potential improvement in asset utilization efficiency.

The Total Asset Turnover ratio demonstrates a more dynamic pattern. It increased from 0.49 in April 2021 to 0.50 in April 2022 and further rose to 0.57 in April 2023, indicating an improving efficiency in generating sales from the total assets employed. This upward trend may reflect better overall asset management or increased operational efficiency. However, in the subsequent year, the ratio declined sharply to 0.40 in April 2024, suggesting a deterioration in asset utilization—possibly due to increased asset base not matched by proportional sales or operational challenges. Interestingly, the ratio rebounds to 0.50 in April 2025, returning to the earlier level observed in 2022, which could indicate a recovery in asset utilization efficiency or improved operational performance.

Overall, the long-term activity ratios reveal a pattern of relative stability with periods of growth and decline, pointing to phases of asset management challenges and subsequent improvements. The company's ability to efficiently leverage its assets appears to fluctuate over time, emphasizing the importance of continued focus on asset management and operational efficiency to sustain or enhance performance levels.