Tractor Supply Company (TSCO)

Short-term

Turnover ratios

Tractor Supply Company's inventory turnover has shown fluctuating trends over the past two years. It ranged from a low of 2.82 at the end of March 2019 to a high of 8.19 at the end of December 2021. The most recent value at the end of December 2023 was 3.53, indicating that the company turned over its inventory approximately 3.53 times during the year. The lower turnover ratios in recent quarters compared to the peak in 2021 suggest that the company may be carrying more inventory relative to its sales.

The receivables turnover ratio data is missing, indicating that the company may not have significant accounts receivable or that the data was not available.

Tractor Supply Company's payables turnover has shown variability but generally stayed within a range over the past two years. The ratio ranged from a low of 6.04 at the end of September 2020 to a high of 14.96 at the end of December 2021. A high payables turnover ratio indicates that the company takes fewer days to pay its suppliers, which can be advantageous for managing cash flow.

The working capital turnover for Tractor Supply Company has also shown fluctuations over the past two years. The ratio ranged from a low of 8.61 at the end of March 2020 to a high of 18.17 at the end of December 2022. A higher working capital turnover ratio implies that the company efficiently utilizes its working capital to generate sales revenue.

Overall, the activity ratios suggest that Tractor Supply Company has managed its inventory, payables, and working capital efficiently, although there have been fluctuations in performance over the observation period. The company may benefit from monitoring and optimizing these ratios to enhance operational performance and financial health.

---

Average number of days

Tractor Supply Company's activity ratios provide insights into how efficiently the company manages its inventory, collects receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH): Tractor Supply's DOH fluctuated throughout the periods, ranging from 44.58 days to 129.65 days. A higher DOH indicates that the company takes longer to sell its inventory, potentially tying up working capital. The decreasing trend from 2020 to 2021 suggests better inventory management, but the spike in DOH in the recent periods may warrant further investigation into inventory levels and sales strategies.

2. Days of Sales Outstanding (DSO): The lack of data for DSO implies that there is insufficient information to evaluate Tractor Supply's efficiency in collecting receivables. Timely collection of receivables is crucial for maintaining cash flow and liquidity. Tractor Supply may want to track DSO to assess its credit policies and customer payment behavior.

3. Number of Days of Payables: The trend in Tractor Supply's payables days shows fluctuation, varying between 24.40 days and 60.48 days. A longer payables period can indicate favorable terms with suppliers, allowing the company to preserve cash. However, excessively extending payables may strain supplier relationships. Tractor Supply seems to have effectively managed its payables days, maintaining a reasonable balance between meeting obligations and utilizing supplier credit.

Overall, Tractor Supply Company's varying activity ratios highlight the importance of monitoring inventory levels, receivables collection, and payables management to optimize working capital and operational efficiency. It is essential for the company to continuously evaluate and improve these ratios to sustain healthy financial performance.

---

Long-term

Tractor Supply Company's long-term activity ratios indicate its efficiency in utilizing its assets to generate sales revenue. Looking at the fixed asset turnover ratio, we see a decreasing trend over the most recent quarters, implying that the company may be experiencing challenges in generating sales relative to its investment in fixed assets. However, the ratio remains relatively stable, indicating the company's ability to efficiently utilize its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio shows a consistent and stable performance over the periods analyzed. This metric indicates the company's overall effectiveness in generating sales revenue relative to its total assets. Tractor Supply Company is maintaining a steady pace in utilizing its total assets to generate sales, reflecting a good level of efficiency in asset utilization.

In conclusion, while Tractor Supply Company may face some challenges in optimizing the use of its fixed assets to drive sales, it demonstrates solid efficiency in leveraging its total assets to generate revenue. It is essential for the company to address any issues affecting the fixed asset turnover to further enhance its overall operational efficiency and profitability.