Simply Good Foods Co (SMPL)

Short-term

Turnover ratios

The activity ratios for Simply Good Foods Co provide insight into how efficiently the company is managing its inventory, receivables, payables, and working capital.

- Inventory turnover has been relatively stable over the periods, indicating that the company is effectively managing its inventory levels and turning over its inventory approximately 6 to 7 times a year. A higher turnover rate suggests efficient inventory management.

- Receivables turnover reflects how quickly the company is collecting its accounts receivable. The company has shown consistent performance in collecting receivables, with turnover ratios between 7 to 9 times a year. A higher turnover rate indicates that the company is collecting receivables efficiently.

- Payables turnover measures how quickly the company is paying its suppliers. Simply Good Foods Co has seen fluctuations in payables turnover, ranging from 10 to 19 times a year. A higher turnover rate may suggest that the company is paying its creditors quickly, which could impact cash flow management.

- Working capital turnover reflects how efficiently the company is utilizing its working capital to generate sales revenue. The company has maintained a relatively stable working capital turnover ratio between 3.5 to 5 times a year. A higher turnover rate signifies more efficient utilization of working capital.

Overall, Simply Good Foods Co appears to have effective management of its inventories, receivables, payables, and working capital based on the activity ratios analyzed. However, closer monitoring of payables turnover and working capital turnover may be necessary to ensure optimal efficiency and cash flow management.

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Average number of days

Simply Good Foods Co's activity ratios provide insights into the efficiency of its operations over time.

1. Days of Inventory on Hand (DOH): The company's inventory turnover has varied over the periods analyzed, with DOH ranging from 37.95 days to 100.91 days. A decrease in DOH indicates a faster turnover of inventory, while an increase suggests slower inventory movement. Simply Good Foods Co should aim to manage its inventory effectively to optimize working capital and avoid excess inventory holding costs.

2. Days of Sales Outstanding (DSO): DSO fluctuated between 30.83 days and 49.91 days, reflecting the company's ability to collect payments from customers. A lower DSO indicates quicker cash conversion from sales, whereas a higher DSO may signal potential issues with receivables management. Simply Good Foods Co should strive to reduce DSO to enhance cash flow and minimize credit risk.

3. Number of Days of Payables: The number of days of payables ranged from 18.76 days to 36.35 days, indicating the average time it takes for the company to pay its suppliers. A longer payment period may suggest favorable terms with suppliers but could strain relationships if extended excessively. Managing payables effectively can help Simply Good Foods Co optimize cash flow and maintain good vendor relations.

Overall, monitoring these activity ratios can help Simply Good Foods Co assess and improve its operational efficiency, working capital management, and cash flow generation.

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Long-term

The fixed asset turnover ratio for Simply Good Foods Co has been fluctuating over the past few quarters, ranging from as low as 14.23 to as high as 70.60. This ratio indicates the company's efficiency in generating sales revenue from its investment in fixed assets. A higher ratio suggests more efficient utilization of fixed assets to generate sales.

On the other hand, the total asset turnover ratio has remained relatively stable around 0.5, with some variations seen in certain quarters. This ratio measures the company's ability to generate sales from its total assets. A higher total asset turnover ratio generally signifies better efficiency in utilizing all assets to generate sales.

Overall, Simply Good Foods Co's long-term activity ratios show a mixed performance in terms of efficiency in utilizing both fixed assets and total assets to generate sales revenue. It is important for the company to monitor these ratios consistently to ensure optimal asset utilization and overall operational efficiency.