Skechers USA Inc (SKX)

Short-term

Turnover ratios

Skechers U S A, Inc.'s activity ratios provide insights into the efficiency of the company's management of its inventory, receivables, payables, and working capital turnover over the years.

1. Inventory Turnover: The inventory turnover ratio measures how effectively a company manages its inventory by indicating the number of times inventory is sold and replaced during a period. Skechers U S A, Inc.'s inventory turnover has fluctuated slightly over the past five years, ranging from 2.16 to 2.55. The decrease in 2022 followed by a slight increase in 2023 suggests that the company improved its inventory management efficiency.

2. Receivables Turnover: The receivables turnover ratio reflects how efficiently a company collects cash from its credit sales. Skechers U S A, Inc. showed a consistent improvement in its receivables turnover ratio from 2019 to 2023, indicating that it has been collecting its receivables at a faster rate over the years. This reflects positively on the company's credit policies and collection efforts.

3. Payables Turnover: The payables turnover ratio demonstrates how quickly a company pays its suppliers. Skechers U S A, Inc.'s payables turnover ratio decreased slightly in 2023 compared to 2022, suggesting that the company took slightly longer to pay its bills in 2023. However, overall, the company has maintained a stable payables turnover ratio over the years.

4. Working Capital Turnover: The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales revenue. Skechers U S A, Inc. has shown a fluctuating trend in its working capital turnover ratio, with a significant increase in 2023 compared to 2022. This indicates that the company has been able to generate more sales revenue for each dollar of working capital invested in the business in 2023.

Overall, the activity ratios of Skechers U S A, Inc. suggest that the company has demonstrated reasonably effective management of its inventory, receivables, payables, and working capital turnover over the past five years, with some fluctuations indicating improvements in certain areas.

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Average number of days

Activity ratios provide insights into how efficiently a company manages its assets and liabilities. Let's analyze the activity ratios of Skechers U S A, Inc. based on the data provided:

1. Days of Inventory on Hand (DOH):
- The trend in DOH indicates a fluctuation in the management of inventory over the past five years.
- The decrease in DOH from 2019 to 2020 and then a subsequent increase until 2022 suggests potential inventory management challenges.
- A decrease in DOH from 2022 to 2023 indicates the company improved its inventory management efficiency during the most recent year.

2. Days of Sales Outstanding (DSO):
- DSO reflects the average number of days it takes for the company to collect payments from customers.
- The decreasing trend in DSO from 2019 to 2023 indicates a more efficient collection of accounts receivable.
- Lower DSO values signify that Skechers U S A, Inc. is better at managing its credit and collecting payments promptly from customers.

3. Number of Days of Payables:
- The trend in the number of days of payables indicates the average length of time it takes for the company to pay its creditors.
- The decreasing trend from 2019 to 2020 was followed by an increase in 2021 and a subsequent decrease in 2022 and 2023.
- A lower number of days of payables can indicate better cash flow management but may also hint at potential strain on supplier relationships.

In conclusion, analyzing the activity ratios of Skechers U S A, Inc. suggests improvements in inventory management, efficient accounts receivable collection, and fluctuating payment terms. Further analysis should be conducted to understand the specific strategies and challenges impacting these ratios and their implications for the company's overall financial performance.

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Long-term

The fixed asset turnover ratio measures how effectively a company utilizes its fixed assets to generate sales. Skechers U S A, Inc. has had fluctuating fixed asset turnover ratios over the past five years, indicating variations in efficiency in using its fixed assets. In 2023, the ratio stood at 5.31, slightly lower than the previous year's figure of 5.53 but still reflective of a strong performance.

On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from all its assets, both fixed and current. Skechers U S A, Inc.'s total asset turnover has also fluctuated over the same time period, ranging from a low of 0.79 in 2020 to a high of 1.08 in 2022. In 2023, the ratio was at 1.06, indicating that the company generated $1.06 in sales for every $1 of total assets.

Overall, while the fixed asset turnover ratio suggests that Skechers U S A, Inc. efficiently utilizes its fixed assets to drive sales, the total asset turnover ratio reveals the company's overall sales-generating efficiency from all its assets. It is important for the company to monitor these ratios consistently to ensure optimal asset utilization and revenue generation.