Unifirst Corporation (UNF)

Short-term

Turnover ratios

Unifirst Corporation's activity ratios provide insights into how efficiently the company manages its assets and liabilities to generate sales.

1. Inventory turnover: The inventory turnover ratio has been relatively stable over the past five years, ranging from 7.95 to 10.96. This indicates that Unifirst Corporation efficiently manages its inventory, with higher turnover ratios implying faster movement of inventory.

2. Receivables turnover: The receivables turnover ratio has also shown consistency, hovering around 8 to 9 times per year. This indicates that the company efficiently collects payments from customers, with a higher turnover ratio reflecting a shorter time taken to collect on credit sales.

3. Payables turnover: Unifirst Corporation has shown a consistent trend of paying its suppliers, with the payables turnover ratio ranging from 14.03 to 18.19. A higher turnover ratio indicates that the company is settling its payables quickly, which can sometimes suggest strong bargaining power with suppliers.

4. Working capital turnover: The working capital turnover ratio has shown an upward trend over the past five years, indicating that Unifirst Corporation is generating more sales relative to its working capital. A higher turnover ratio suggests that the company is efficiently utilizing its working capital to support sales growth.

Overall, the activity ratios reflect Unifirst Corporation's efficient management of inventory, collection of receivables, payment to suppliers, and utilization of working capital to drive sales.

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Average number of days

Unifirst Corporation's activity ratios reflect how efficiently the company manages its inventory, collects its receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH) has been relatively stable over the past five years, ranging from 33.30 days to 45.92 days. A lower DOH indicates that Unifirst is selling its inventory quickly, which is generally positive as it reduces carrying costs and the risk of obsolescence.

2. Days of Sales Outstanding (DSO) measures how long it takes for the company to collect payment from its customers. Unifirst's DSO has fluctuated slightly, but generally remained within a narrow range between 38.49 days and 45.48 days. A lower DSO suggests efficient management of accounts receivable.

3. Number of Days of Payables shows how long it takes for the company to pay its suppliers. Unifirst has been consistent in its payment practices, with the number of days of payables ranging from 20.06 days to 26.02 days. A longer payable period can indicate better cash flow management, but may strain supplier relationships if extended too far.

Overall, Unifirst Corporation appears to have maintained a balanced approach in managing its inventory, receivables, and payables over the years, which is indicative of effective working capital management.

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Long-term

Unifirst Corporation's long-term activity ratios, specifically the Fixed Asset Turnover and Total Asset Turnover, provide insights into how efficiently the company is utilizing its assets to generate revenue over time.

The Fixed Asset Turnover ratio measures Unifirst's ability to generate sales from its investment in fixed assets. A higher ratio typically indicates better efficiency in utilizing fixed assets to generate revenue. In Unifirst's case, the Fixed Asset Turnover ratio has been relatively stable over the past five years, ranging from 2.96 to 3.11. This suggests that the company has been consistently effective in generating sales from its investments in long-term assets such as property, plant, and equipment.

On the other hand, the Total Asset Turnover ratio assesses Unifirst's overall efficiency in generating sales from all its assets, including both fixed and current assets. A higher ratio indicates better efficiency in using all assets to generate revenue. Unifirst's Total Asset Turnover ratio has shown an increasing trend over the past five years, with the ratio improving from 0.77 in 2021 to 0.90 in 2024. This upward trend suggests that the company has been improving its overall efficiency in generating sales from its total asset base.

In conclusion, Unifirst Corporation has demonstrated consistent efficiency in generating revenue from its fixed assets, as indicated by a stable Fixed Asset Turnover ratio. Additionally, the company has shown improvement in utilizing its total asset base to generate sales, as reflected in the increasing Total Asset Turnover ratio over the five-year period. Overall, these long-term activity ratios suggest that Unifirst is effectively managing and utilizing its assets to drive business performance and revenue generation.