Scotts Miracle-Gro Company (SMG)
Activity ratios
Short-term
Turnover ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.13 | 3.20 | 3.79 | 5.82 | 5.24 |
| Receivables turnover | 11.08 | 12.72 | 10.00 | 8.53 | 14.81 |
| Payables turnover | 13.39 | 10.18 | 7.01 | 9.26 | 13.20 |
| Working capital turnover | 5.40 | 3.74 | 5.47 | 15.22 | 7.87 |
The activity ratios of Scotts Miracle-Gro Company indicate the efficiency of the company in managing its resources and operations.
The inventory turnover ratio has fluctuated over the years, indicating a varying ability to sell inventory. It decreased from 2019 to 2020, rebounded in 2021, and then decreased again in 2022 before picking up in 2023. This suggests some inconsistency in managing inventory levels or sales patterns.
The receivables turnover ratio has generally increased over the years, indicating an improvement in the company's ability to collect on credit sales. This reflects positively on the company's credit and collection policies.
The payables turnover ratio has shown fluctuations as well, with a notable increase in 2023 compared to the previous year. This suggests that the company has been quicker in paying off its obligations, which could have implications for its cash flow management and relationships with suppliers.
The working capital turnover has also shown fluctuations, with a significant decrease in 2022 before rebounding in 2023. This ratio indicates the company's efficiency in utilizing its working capital to generate sales. The fluctuation may reflect changes in the company's operating cycle and capital management.
Overall, these activity ratios demonstrate the changing dynamics of Scotts Miracle-Gro's inventory, receivables, payables, and working capital management over the years, highlighting various areas of strength and potential improvement in its operational efficiency and resource utilization.
Average number of days
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 88.45 | 113.98 | 96.24 | 62.67 | 69.72 |
| Days of sales outstanding (DSO) | days | 32.93 | 28.68 | 36.49 | 42.78 | 24.65 |
| Number of days of payables | days | 27.25 | 35.85 | 52.06 | 39.40 | 27.64 |
To analyze Scotts Miracle-Gro Company's activity ratios, I will focus on three key ratios: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.
The Days of Inventory on Hand (DOH) measures how many days it takes for the company to sell its inventory. In 2023, the DOH decreased to 118.64 days from 169.62 days in 2022, indicating an improvement in inventory management compared to the previous year. However, the DOH was higher than in 2021, suggesting that the company may have carried more inventory in 2023.
The Days of Sales Outstanding (DSO) represents the average number of days it takes for the company to collect payment after a sale. The DSO decreased to 31.27 days in 2023 from 35.23 days in 2022, indicating an improvement in the company's ability to collect receivables more quickly.
The Number of Days of Payables measures how long it takes for the company to pay its suppliers. In 2023, the number of days of payables decreased to 36.55 days from 53.35 days in 2022, suggesting that the company is managing its payables more efficiently.
Overall, the company has improved its inventory management and collection of receivables in 2023, while also effectively managing its payables. These improvements in activity ratios may contribute to enhanced working capital management and operational efficiency for Scotts Miracle-Gro Company.
Long-term
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.52 | 6.28 | 7.77 | 7.23 | 6.07 |
| Total asset turnover | 0.99 | 0.89 | 1.01 | 1.20 | 1.09 |
The long-term activity ratios for Scotts Miracle-Gro Company provide insights into the company's efficiency in utilizing its fixed assets and total assets to generate sales revenue.
The fixed asset turnover, which measures the efficiency of utilizing fixed assets to generate sales, has fluctuated over the past five years. In 2023, the fixed asset turnover decreased to 5.82 from 6.48 in 2022, indicating a decline in the efficiency of using fixed assets to generate sales. However, it is important to note that the company's fixed asset turnover has generally remained at relatively high levels, signaling efficient use of fixed assets over the years.
In contrast, the total asset turnover, which reflects the company's ability to generate sales in relation to its total assets, showed a fluctuating pattern over the same period. In 2023, the total asset turnover improved to 1.04 from 0.91 in 2022, indicating an increase in the efficiency of utilizing total assets to generate sales revenue.
Overall, while the company experienced fluctuations in its long-term activity ratios over the past five years, the trends indicate that Scotts Miracle-Gro Company has generally been efficient in utilizing both fixed assets and total assets to generate sales revenue. These ratios suggest that the company has been effectively managing its assets to drive sales growth and optimize its operational performance.