Tempur Sealy International Inc (TPX)

Short-term

Turnover ratios

Tempur Sealy International Inc's activity ratios provide insights into its efficiency in managing inventory, receivables, payables, and working capital.

1. Inventory turnover: The inventory turnover ratio measures how efficiently the company is selling its inventory. Tempur Sealy's inventory turnover has fluctuated over the years but seems to have been relatively stable, ranging from 5.17 to 6.77 times. A higher turnover indicates better inventory management and quicker sales.

2. Receivables turnover: This ratio reflects the company's ability to collect payments on credit sales. Tempur Sealy's receivables turnover has generally been increasing over the years, indicating that the company has been collecting its receivables more quickly. A higher turnover ratio suggests effective credit management.

3. Payables turnover: The payables turnover ratio shows how quickly the company is paying its suppliers. Tempur Sealy's payables turnover has varied, with a notable increase in 2023 compared to previous years. A higher turnover ratio may indicate better cash management and possibly improved supplier relationships.

4. Working capital turnover: This ratio measures how efficiently the company is utilizing its working capital to generate sales revenue. Tempur Sealy's working capital turnover has been consistently high, indicating effective use of working capital to generate sales. A higher turnover ratio suggests that the company is efficiently converting working capital into revenue.

In summary, Tempur Sealy International Inc's activity ratios demonstrate moderate to strong efficiency in managing inventory, receivables, payables, and working capital. The company's improving receivables turnover and stable inventory turnover indicate effective operations management, while the notable increase in payables turnover in 2023 may reflect improved cash flow management. Additionally, the high working capital turnover suggests efficient utilization of working capital to drive sales growth.

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Average number of days

Activity ratios provide insight into how efficiently a company manages its assets and operations. Let's analyze the activity ratios of Tempur Sealy International Inc over the past five years.

1. Days of Inventory on Hand (DOH):
- The company's DOH has fluctuated over the years, indicating changes in inventory management.
- The decreasing trend from 70.54 days in 2022 to 63.05 days in 2023 suggests improved inventory turnover efficiency.
- A lower DOH is generally favorable as it signifies that inventory is being sold faster, reducing holding costs and potential obsolescence risks.

2. Days of Sales Outstanding (DSO):
- Tempur Sealy International Inc has effectively managed its accounts receivable over the years, reflected in decreasing DSO values.
- The trend shows an improvement from 43.72 days in 2019 to 31.97 days in 2023, indicating a quicker collection of sales revenue.
- A lower DSO signifies better cash flow management and a shorter time frame for converting credit sales into cash.

3. Number of Days of Payables:
- The trend in the number of days of payables indicates changes in the company's payment practices to its suppliers.
- The decrease in days of payables from 52.09 days in 2019 to 40.63 days in 2023 suggests more timely payments to suppliers.
- A lower number of days of payables may indicate improved supplier relationships and potential negotiating power.

In conclusion, Tempur Sealy International Inc has shown improvements in managing its inventory turnover, accounts receivable collection, and payment to suppliers over the years. These trends suggest enhanced operational efficiency and cash flow management, which are crucial for the company's overall financial health and sustainability.

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Long-term

The fixed asset turnover ratio for Tempur Sealy International Inc has exhibited a declining trend over the past five years, decreasing from 8.45 in 2021 to 5.61 in 2023. This decline indicates that the company is generating lower sales revenue in relation to its fixed assets.

Similarly, the total asset turnover ratio has also seen a slight decrease over the same period, from 1.14 in 2021 to 1.08 in 2023. This suggests that the company is generating lower sales revenue in relation to its total assets.

Overall, the declining trend in both the fixed asset turnover and total asset turnover ratios may indicate potential inefficiencies in asset utilization or slower sales growth relative to the assets employed by Tempur Sealy International Inc. Further analysis and comparison with industry benchmarks would be necessary to fully assess the company's long-term activity performance.