Target Corporation (TGT)
Activity ratios
Short-term
Turnover ratios
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | |
|---|---|---|---|---|---|
| Inventory turnover | 7.93 | 8.57 | 7.80 | 6.99 | 8.17 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | 7.74 | 8.42 | 7.81 | 6.28 | 6.77 |
| Working capital turnover | — | — | — | — | 145.94 |
Target Corporation's inventory turnover ratio has fluctuated over the years, with values ranging from 6.99 to 8.57. This ratio indicates how effectively the company manages its inventory by selling and replacing its stock. A higher turnover ratio generally suggests efficient inventory management, but the ideal ratio varies by industry and company size.
The company has not provided data on receivables turnover, which measures how quickly a company collects outstanding payments from customers. Without this information, it is difficult to assess Target's efficiency in collecting receivables.
Target Corporation's payables turnover ratio has shown a positive trend over the years, increasing from 6.28 to 8.42. This ratio reflects how quickly the company pays its suppliers or creditors. An increasing payables turnover ratio indicates that Target is taking longer to pay its bills, potentially improving its cash flow position.
The working capital turnover ratio, although unavailable for recent years, was reported as 145.94 in January 30, 2021. This ratio measures how effectively a company generates revenue from its working capital. A high working capital turnover ratio suggests that Target efficiently utilizes its working capital to generate sales.
Overall, the activity ratios suggest that Target Corporation has been managing its inventory efficiently and improving its relationships with suppliers, but the lack of data on receivables turnover and recent working capital turnover limits a comprehensive analysis of the company's overall activity efficiency.
Average number of days
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 46.01 | 42.61 | 46.77 | 52.23 | 44.65 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | 47.14 | 43.37 | 46.73 | 58.15 | 53.90 |
Based on the data provided for Target Corporation, I have analyzed the following activity ratios:
1. Days of Inventory on Hand (DOH):
- In January 2021, Target had inventory on hand for an average of 44.65 days before it was sold.
- By January 2025, this metric had increased to 46.01 days, indicating that Target held inventory for a slightly longer period at that point.
- Overall, Target's DOH has fluctuated over the years, with some fluctuations, but has generally remained within a reasonable range.
2. Days of Sales Outstanding (DSO):
- The DSO data was not provided for any of the years, suggesting that this metric may not be applicable or relevant in Target's specific financial reporting or operational context.
- Without the DSO values, it is challenging to assess Target's efficiency in collecting accounts receivable, as DSO measures the average number of days it takes a company to collect revenue after a sale.
3. Number of Days of Payables:
- Target took an average of 53.90 days to pay its suppliers in January 2021, which then increased to 47.14 days by February 2025.
- A decreasing trend in the number of days of payables indicates that Target has been paying its suppliers more quickly over the years.
- Efficient management of payables can help improve cash flow and relationships with suppliers.
In conclusion, while the Days of Inventory on Hand and Number of Days of Payables provide insights into Target's inventory management and payment practices, the lack of data on Days of Sales Outstanding limits a comprehensive analysis of the company's efficiency in sales collection.
See also:
Long-term
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.39 | 3.23 | 3.45 | 3.76 | 3.43 |
| Total asset turnover | 1.84 | 1.93 | 2.04 | 1.97 | 1.80 |
Target Corporation's fixed asset turnover ratio has shown a relatively stable performance over the years, with values ranging from 3.23 to 3.76. This ratio indicates that, on average, the company generates between 3.23 to 3.76 in revenue for every dollar invested in fixed assets. The slight fluctuations in the ratio may suggest changes in the efficiency of utilizing fixed assets to generate sales, with a peak in 2022 and a slight dip in 2024.
In contrast, the total asset turnover ratio has displayed more variability, fluctuating between 1.80 and 2.04. This ratio reflects the company's ability to generate sales revenue relative to its total assets. The upward trend from 1.80 in 2021 to 2.04 in 2023 indicates an improvement in the efficiency of utilizing total assets to drive sales. However, there was a slight decrease in 2024 and 2025, suggesting a potential decrease in sales generated per dollar of total assets invested.
Overall, while the fixed asset turnover ratio highlights Target's consistent ability to generate revenue from its fixed assets, the total asset turnover ratio shows fluctuations in the company's efficiency in using total assets to drive sales. It is essential for Target to monitor and optimize these ratios to ensure effective asset utilization and sustainable growth.