Constellation Brands Inc Class A (STZ)

Activity ratios

Short-term

Turnover ratios

	Feb 29, 2024	Feb 28, 2023	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020
Inventory turnover	3.34	4.05	3.71	4.52	4.25
Receivables turnover	24.79	21.71	20.48	22.84	20.07
Payables turnover	6.27	8.16	6.49	12.67	10.46
Working capital turnover	35.12	37.08	29.19	10.10	14.81

The inventory turnover ratio for Constellation Brands Inc Class A has been gradually decreasing from 4.52 in February 2021 to 3.34 in February 2024, indicating that the company is selling its inventory at a slower pace. This trend might suggest issues with inventory management or potentially declining demand for its products.

On the other hand, the receivables turnover ratio has been consistently increasing over the years, reaching 24.79 in February 2024. This signifies that the company is collecting its receivables more efficiently, which is a positive sign of effective credit management and timely collections from customers.

The payables turnover ratio has fluctuated over the years, with a sharp decrease from 12.67 in February 2021 to 6.27 in February 2024. A lower payables turnover ratio could imply that the company is taking longer to pay its suppliers, which may impact relationships with creditors.

Furthermore, the working capital turnover ratio has shown an overall increasing trend, indicating that the company is generating more revenue relative to its working capital levels. A higher working capital turnover ratio suggests improved efficiency in utilizing working capital to generate sales.

In conclusion, Constellation Brands Inc Class A should closely monitor its inventory management and payment practices to ensure healthy working capital levels and maintain efficiency in its operations. While the increasing receivables turnover ratio is a positive indicator, efforts should be made to manage payables effectively to maintain good relationships with suppliers.

Average number of days

		Feb 29, 2024	Feb 28, 2023	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020
Days of inventory on hand (DOH)	days	109.32	90.21	98.40	80.83	85.98
Days of sales outstanding (DSO)	days	14.73	16.82	17.82	15.98	18.18
Number of days of payables	days	58.24	44.73	56.24	28.80	34.90

The activity ratios of Constellation Brands Inc Class A provide insights into the efficiency of the company's management of inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH): This ratio indicates the number of days it takes for the company to sell its inventory. An increasing trend in DOH figures over the years, from 85.98 days in 2020 to 109.32 days in 2024, suggests that the company is holding inventory for a longer period before selling it. This may indicate potential inefficiencies in inventory management or challenges in demand forecasting.

2. Days of Sales Outstanding (DSO): DSO reflects how quickly the company is collecting payments from its customers. The declining trend in DSO figures, from 18.18 days in 2020 to 14.73 days in 2024, indicates that Constellation Brands has been improving its ability to collect cash from customers more efficiently over the years.

3. Number of Days of Payables: This ratio represents the number of days it takes for the company to pay its suppliers. The company's days of payables have been fluctuating over the years, with an increasing trend observed from 2020 to 2024, rising from 34.90 days to 58.24 days. This could suggest that Constellation Brands is taking longer to pay its suppliers, potentially improving cash flow management or negotiating better credit terms.

In conclusion, while Constellation Brands Inc Class A has been able to improve its collection of cash from customers (DSO) over the years, there are indications that the company may need to address the increasing trend in days of inventory on hand (DOH) and the growing number of days of payables. Further analysis and potential adjustments in inventory management and payables processes may be necessary to enhance overall operational efficiency.

Long-term

	Feb 29, 2024	Feb 28, 2023	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020
Fixed asset turnover	2.57	2.85	3.04	3.08	3.26
Total asset turnover	0.80	0.79	0.71	0.66	0.64

Constellation Brands Inc Class A's long-term activity ratios indicate how efficiently the company utilizes its assets to generate sales. The fixed asset turnover ratio has shown a slight decreasing trend over the last five years, from 3.26 in February 2020 to 2.57 in February 2024. This suggests that the company is generating fewer sales for each dollar invested in fixed assets.

On the other hand, the total asset turnover ratio has slightly fluctuated over the same period but has generally improved. It increased from 0.64 in February 2020 to 0.80 in February 2024, indicating that the company is generating more sales for each dollar of total assets.

Overall, while the fixed asset turnover ratio has declined, the total asset turnover ratio has shown improvement. Both ratios indicate that Constellation Brands Inc Class A may need to evaluate its utilization of fixed assets to enhance operational efficiency and increase sales generated from its total asset base.