VF Corporation (VFC)

Short-term

Turnover ratios

The activity ratios of VF Corporation provide insights into how efficiently the company manages its operational activities.

1. Inventory turnover: VF Corporation's inventory turnover has shown a fluctuating trend over the past five years, with a peak in 2021 and a slight decrease in 2024. The company is able to turn over its inventory approximately 5.89 times in 2024, which indicates that VF Corporation is effectively managing its inventory levels to meet customer demand.

2. Receivables turnover: The receivables turnover ratio reflects how quickly VF Corporation collects payments from its customers. The ratio has been consistently above 7 over the past five years, indicating that the company efficiently collects its receivables. An increase in this ratio would suggest improved efficiency in collecting payments.

3. Payables turnover: The payables turnover ratio measures how quickly VF Corporation pays its suppliers. The ratio has shown a decreasing trend over the years, with a notable decrease in 2024. A lower payables turnover ratio may indicate the company is taking longer to pay its suppliers, which could impact relationships and potentially lead to higher financing costs.

4. Working capital turnover: The working capital turnover ratio assesses how effectively VF Corporation utilizes its working capital to generate revenue. The ratio has fluctuated over the years, with a significant increase in 2024. A higher working capital turnover ratio suggests that the company is efficiently using its resources to drive sales and revenue growth.

In conclusion, VF Corporation's activity ratios indicate a mixed performance in terms of managing its operational activities efficiently. The company demonstrates solid inventory and receivables management but may need to monitor its payables turnover to optimize supplier relationships and control financing costs. The improving working capital turnover ratio suggests potential enhancements in utilizing working capital effectively to drive revenue growth.

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Average number of days

Activity ratios provide insights into how efficiently a company manages its assets and liabilities to generate revenue. Let's analyze the activity ratios of VF Corporation based on the provided data.

1. Days of Inventory on Hand (DOH):
- VF Corporation's days of inventory on hand have fluctuated over the past five years, ranging from 43.16 days in 2021 to 76.31 days in 2023.
- A decreasing trend in DOH indicates that the company is managing its inventory more efficiently, as it is taking less time to sell its inventory.
- However, the increase in DOH in 2023 suggests a buildup of excess inventory, which may impact liquidity and profitability.

2. Days of Sales Outstanding (DSO):
- VF Corporation's days of sales outstanding have varied over the years, with the lowest being 45.52 days in 2020 and the highest at 52.03 days in 2021.
- A lower DSO indicates the company is collecting payments from customers more quickly, improving cash flow and reducing the risk of bad debts.
- The trend in DSO for VF Corporation has been relatively stable, reflecting consistent credit management practices.

3. Number of Days of Payables:
- VF Corporation's number of days of payables has increased gradually over the years, from 15.54 days in 2020 to 31.16 days in 2023.
- A longer payment period can benefit the company by preserving cash for other uses and improving liquidity.
- However, an extended payment period may strain relationships with suppliers if not managed carefully.

In conclusion, VF Corporation's activity ratios show mixed performance in managing its inventory, receivables, and payables over the past five years. The company has demonstrated improvements in inventory turnover and stable receivables collection practices, but its payables management has become more lenient. Monitoring and optimizing these activity ratios will be essential for maintaining operational efficiency and financial health.

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Long-term

The long-term activity ratios of VF Corporation provide insights into the efficiency of the company's utilization of its fixed assets and total assets over the past five years.

1. Fixed Asset Turnover:
- VF Corporation's fixed asset turnover has shown a positive trend over the past five years, increasing from 10.99 in Mar 31, 2020, to 12.54 in Mar 31, 2024. This signifies that the company is generating more revenue per dollar of fixed assets invested.
- The consistently high fixed asset turnover indicates that VF Corporation efficiently utilizes its fixed assets to generate sales, reflecting effective management of its long-term resources.

2. Total Asset Turnover:
- The total asset turnover of VF Corporation has fluctuated in the past five years, with a peak of 0.94 in Mar 31, 2020, and a low of 0.66 in Mar 31, 2021, before rising to 0.88 in Mar 31, 2024. This indicates varying levels of efficiency in generating sales relative to the total assets employed.
- Overall, VF Corporation's total asset turnover has shown some stability and improvement, suggesting the company's ability to efficiently generate sales in relation to its total asset base.

In conclusion, VF Corporation demonstrates strong efficiency in utilizing its fixed assets, as reflected in the increasing trend of fixed asset turnover. While there have been fluctuations in total asset turnover, the company has generally shown improvement in effectively generating sales in relation to its total asset base. These long-term activity ratios highlight VF Corporation's ongoing efforts to optimize asset utilization and drive revenue generation.