Simply Good Foods Co (SMPL)

Working capital turnover

		Aug 26, 2023	Aug 27, 2022	Aug 28, 2021	Aug 29, 2020	Aug 31, 2019
Revenue	US$ in thousands	1,242,670	1,168,680	1,005,610	816,641	523,383
Total current assets	US$ in thousands	371,652	351,601	298,666	260,263	357,607
Total current liabilities	US$ in thousands	89,857	102,248	113,664	71,478	48,032
Working capital turnover		4.41	4.69	5.44	4.33	1.69

August 26, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $1,242,670K ÷ ($371,652K – $89,857K)
= 4.41

The working capital turnover ratio measures how efficiently a company is using its working capital to generate sales. A higher ratio indicates better efficiency in managing working capital.

Looking at Simply Good Foods Co's working capital turnover from 2019 to 2023, we observe fluctuations in the ratio. In 2019, the working capital turnover ratio was relatively low at 1.69, indicating that the company was generating $1.69 in sales for every $1 of working capital. This might suggest inefficiency in utilizing its working capital to generate sales.

However, over the next few years, the ratio increased significantly, reaching 5.44 in 2021, indicating a considerable improvement in utilizing working capital to drive sales. This demonstrates that the company became more efficient in managing its working capital and generating sales.

In 2022, the ratio slightly decreased to 4.69, but it remained at a relatively high level, showing consistent efficiency in utilizing working capital to generate sales.

In the most recent year, 2023, the working capital turnover ratio further decreased to 4.41, although it still reflects a relatively high level of efficiency compared to the base year 2019.

Overall, the trend indicates an improvement in Simply Good Foods Co's efficiency in utilizing working capital to drive sales, with fluctuations in the ratio suggesting some variability in managing working capital efficiency over the years. It's important for the company to maintain a balance between working capital management and sales generation to sustain its operational efficiency and financial health.