The TJX Companies Inc (TJX)

Activity ratios

Short-term

Turnover ratios

	Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020
Inventory turnover	8.28	7.93	7.49	7.47	7.83
Receivables turnover	92.03	73.38	76.31	63.43	96.20
Payables turnover	12.79	12.17	10.00	6.72	14.28
Working capital turnover	24.45	23.27	17.28	6.39	23.95

The activity ratios of The TJX Companies Inc over the past five fiscal years indicate the company's efficiency in managing its inventory, receivables, payables, and working capital.

1. Inventory turnover:
The trend in inventory turnover shows a slight increase from 7.47 in 2021 to 8.28 in 2024, indicating that the company is selling its inventory more quickly. This suggests strong inventory management and effective sales strategies, leading to faster inventory turnover.

2. Receivables turnover:
The receivables turnover ratio has fluctuated over the years, reaching its peak at 96.20 in 2020 and its lowest point at 63.43 in 2021. The significant increase in 2020 and subsequent decrease in 2021 may indicate changes in credit policies or sales terms. Overall, the high receivables turnover ratios suggest that the company efficiently collects payments from customers.

3. Payables turnover:
The payables turnover ratio shows a consistent increase from 6.72 in 2021 to 12.79 in 2024, indicating that the company is taking longer to pay its suppliers. This may reflect strong bargaining power, favorable credit terms, or effective cash management practices. However, a very high payables turnover ratio may also signal potential liquidity issues or strained supplier relationships.

4. Working capital turnover:
The working capital turnover ratio increased significantly from 6.39 in 2021 to 24.45 in 2024, indicating that the company is generating more revenue for each dollar of working capital invested. This suggests improved operational efficiency and better utilization of resources to drive sales growth.

Overall, The TJX Companies Inc's activity ratios reflect a positive trend in inventory turnover and working capital turnover, indicating good operational performance and effective management of assets. However, fluctuations in receivables and payables turnover ratios may warrant further investigation into changes in the company's credit and payment policies.

Average number of days

		Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020
Days of inventory on hand (DOH)	days	44.09	46.00	48.73	48.84	46.61
Days of sales outstanding (DSO)	days	3.97	4.97	4.78	5.75	3.79
Number of days of payables	days	28.55	29.99	36.50	54.32	25.56

The activity ratios of The TJX Companies Inc provide insights into how efficiently the company manages its inventory, collects accounts receivable, and pays its suppliers.

Days of inventory on hand (DOH) decreased from 46.61 days in 2020 to 44.09 days in 2024, indicating that the company is managing its inventory more efficiently, possibly by streamlining its supply chain or improving inventory turnover.

Days of sales outstanding (DSO) fluctuated over the years but decreased from 5.75 days in 2021 to 3.97 days in 2024, suggesting that the company is collecting receivables more quickly. This could be attributed to tightened credit policies or improvements in customer payment processes.

The number of days of payables decreased significantly from 54.32 days in 2021 to 28.55 days in 2024. This indicates that the company is taking longer to pay its suppliers, potentially improving cash flow management or negotiating better terms with vendors.

Overall, the trend in these activity ratios reflects that The TJX Companies Inc is effectively managing its working capital components, optimizing its cash conversion cycle, and enhancing operational efficiency.

Long-term

	Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020
Fixed asset turnover	8.23	8.65	9.15	6.27	7.83
Total asset turnover	1.82	1.77	1.69	1.02	1.73

The long-term activity ratios of The TJX Companies Inc indicate the efficiency of the company in generating sales with its fixed and total assets over the past five years.

The fixed asset turnover has remained relatively high and stable, ranging from 6.27 to 9.15. This suggests that TJX is effectively utilizing its fixed assets to generate sales revenue. A higher fixed asset turnover ratio indicates that the company is efficiently using its property, plant, and equipment to generate sales.

On the other hand, the total asset turnover ratio has shown some fluctuation over the years, with the highest value of 1.82 in the most recent year. This ratio signifies how well the company is utilizing all its assets to generate revenue. A higher total asset turnover ratio indicates efficient use of both fixed and current assets to generate sales.

Overall, the trend in both fixed asset turnover and total asset turnover ratios indicates that The TJX Companies Inc has been able to effectively utilize its assets to generate revenue, with a particularly strong performance in terms of fixed asset turnover.