Scotts Miracle-Gro Company (SMG)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 2.95 | 4.02 | 3.86 | 3.62 | 2.79 | 3.20 | 3.15 | 2.55 | 2.52 | 3.79 | 4.55 | 4.19 | 3.65 | 5.82 | 6.67 | 4.05 | 3.32 | 5.24 | 5.34 | 4.05 |
| Receivables turnover | 11.49 | 11.24 | 4.94 | — | 12.03 | 12.73 | 6.01 | 4.53 | 14.95 | 10.00 | 4.74 | 3.99 | 12.85 | 8.57 | 3.79 | 3.37 | 16.34 | 13.74 | 7.61 | 4.06 |
| Payables turnover | 10.36 | 13.06 | 9.34 | 9.83 | 11.61 | 10.18 | 15.24 | 8.01 | 9.75 | 7.01 | 9.36 | 7.76 | 7.82 | 9.26 | 10.60 | 9.26 | 9.30 | 13.21 | 12.80 | 9.16 |
| Working capital turnover | 3.60 | 5.48 | 3.84 | 2.47 | 2.74 | 3.74 | 2.67 | 2.51 | 3.37 | 5.47 | 4.22 | 4.00 | 7.13 | 15.28 | 5.47 | 3.15 | 4.35 | 7.30 | 6.93 | 4.18 |
The activity ratios of Scotts Miracle-Gro Company provide insights into the efficiency of the company's operations in managing inventory, receivables, payables, and working capital.
1. Inventory Turnover: This ratio indicates how many times the company's inventory is sold and replaced over a given period. The trend shows an improvement in inventory turnover over the years, with a peak in the third quarter of 2020 and the first quarter of 2020, which suggests better management of inventory levels and sales efficiency.
2. Receivables Turnover: This ratio measures how quickly the company collects payments from its customers. The fluctuation in receivables turnover indicates variations in the company's credit policies and collection efficiency. The company saw a decline in the second quarter of 2023 compared to previous periods, indicating a slower collection of receivables during that period.
3. Payables Turnover: This ratio reflects how quickly the company pays its suppliers. The data shows some fluctuations over the years, with some quarters showing a higher turnover while others showing a lower turnover. The company generally maintains a healthy balance between the payment to suppliers and the length of the payable period.
4. Working Capital Turnover: This ratio assesses how efficiently the company is utilizing its working capital to generate sales revenue. The working capital turnover has fluctuated over the years, peaking in the third quarter of 2020. A higher turnover ratio indicates that the company is effectively using its working capital to support sales activities.
Overall, the activity ratios reflect the company's efforts to manage its assets and liabilities efficiently to support its operations and drive revenue growth.
Average number of days
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 123.88 | 90.70 | 94.56 | 100.76 | 130.84 | 113.97 | 115.83 | 143.08 | 145.06 | 96.24 | 80.22 | 87.16 | 99.98 | 62.67 | 54.70 | 90.22 | 109.87 | 69.72 | 68.35 | 90.10 |
| Days of sales outstanding (DSO) | days | 31.77 | 32.46 | 73.91 | — | 30.34 | 28.68 | 60.76 | 80.56 | 24.42 | 36.49 | 76.92 | 91.56 | 28.40 | 42.59 | 96.32 | 108.44 | 22.34 | 26.57 | 47.96 | 89.94 |
| Number of days of payables | days | 35.22 | 27.94 | 39.08 | 37.13 | 31.45 | 35.85 | 23.95 | 45.55 | 37.44 | 52.06 | 38.99 | 47.03 | 46.69 | 39.40 | 34.44 | 39.41 | 39.25 | 27.64 | 28.51 | 39.85 |
Activity ratios provide insights into how efficiently a company manages its resources.
1. Days of Inventory on Hand (DOH): This ratio indicates how many days it takes for Scotts Miracle-Gro Company to sell its inventory. A decreasing trend in this ratio over time, such as from 130.84 days in Dec 2022 to 123.88 days in Dec 2023, suggests that the company is managing its inventory more efficiently. However, the ratio should ideally be benchmarked against industry averages for a better interpretation.
2. Days of Sales Outstanding (DSO): DSO reveals the average number of days it takes for the company to collect payment after a sale is made. A fluctuating DSO, such as the spike from 30.34 days in Dec 2022 to 73.91 days in Jun 2023, can indicate challenges in collecting receivables promptly. The company may need to review its credit policies or collections procedures to improve this ratio.
3. Number of Days of Payables: This ratio reflects how long it takes for Scotts Miracle-Gro Company to pay its suppliers. A longer payment period may indicate favorable credit terms or the company's ability to manage cash flow effectively. For example, the increase in days of payables from 27.94 days in Sep 2023 to 35.22 days in Dec 2023 may suggest a delayed payment strategy to preserve cash.
Overall, monitoring these activity ratios over time and in comparison to industry benchmarks can help identify operational efficiency improvements and potential cash flow management strategies for Scotts Miracle-Gro Company.
Long-term
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed asset turnover | 5.41 | 5.60 | 6.00 | 6.16 | 6.32 | 6.28 | 6.48 | 7.22 | 7.54 | 7.77 | 8.62 | 8.68 | 7.94 | 7.27 | 6.89 | 6.25 | 5.77 | 5.63 | 5.94 | 5.52 |
| Total asset turnover | 0.89 | 1.00 | 0.80 | 0.73 | 0.83 | 0.89 | 0.81 | 0.72 | 0.89 | 1.01 | 1.09 | 0.99 | 1.11 | 1.20 | 0.95 | 0.81 | 0.91 | 1.02 | 0.87 | 0.72 |
The fixed asset turnover ratio for Scotts Miracle-Gro Company has shown a consistent upward trend over the past few years, indicating that the company is generating more revenue relative to its investment in fixed assets. This suggests improved efficiency in utilizing its fixed assets to generate sales.
On the other hand, the total asset turnover ratio has been more volatile, fluctuating between 0.72 and 1.20. This ratio measures the company's ability to generate sales from its total assets, including both fixed and current assets. The variability in this ratio could be due to changes in the company's asset base or differences in sales performance over the periods analyzed.
Overall, the increasing trend in fixed asset turnover coupled with the fluctuating total asset turnover indicates that Scotts Miracle-Gro Company may have been focusing on optimizing the use of its fixed assets to drive sales, while the total asset turnover may have been influenced by factors impacting overall asset utilization and sales generation.