Target Corporation (TGT)
Payables turnover
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 101,807,000 | 105,338,000 | 97,146,000 | 87,084,000 | 73,477,000 |
| Payables | US$ in thousands | 12,098,000 | 13,487,000 | 15,478,000 | 12,859,000 | 9,920,000 |
| Payables turnover | 8.42 | 7.81 | 6.28 | 6.77 | 7.41 |
February 3, 2024 calculation
Payables turnover = Cost of revenue ÷ Payables
= $101,807,000K ÷ $12,098,000K
= 8.42
The payables turnover ratio for Target Corporation has shown a fluctuating trend over the past five years. From January 30, 2021, to January 28, 2023, the ratio decreased from 6.77 to 7.81, reflecting a longer period for the company to pay its suppliers. However, in the most recent fiscal year ending on February 3, 2024, the ratio increased significantly to 8.42, indicating that Target Corporation has improved its efficiency in managing its accounts payable by paying its suppliers more frequently within the year.
A higher payables turnover ratio typically suggests that a company is efficiently managing its accounts payable by paying suppliers in a timely manner, which can sometimes indicate good relationships with suppliers. However, a very high ratio could also imply that a company is not taking advantage of the credit period provided by its suppliers. Conversely, a low payables turnover ratio may indicate that a company is taking longer to pay its suppliers, potentially straining relationships or missing out on potential discounts.
Overall, while the increase in Target Corporation's payables turnover ratio in 2024 is a positive sign of improved efficiency in managing payables, it is important to consider industry benchmarks and analyze other financial ratios in conjunction to gain a comprehensive understanding of the company's financial health.
Peer comparison
Feb 3, 2024