Victoria's Secret & Co (VSCO)

Short-term

Turnover ratios

Victoria's Secret & Co's activity ratios show the efficiency of the company in managing its assets and liabilities.

1. Inventory turnover:
- The inventory turnover ratio has been fluctuating over the periods, ranging from 3.42 to 6.06. This indicates that on average, inventory is sold and replaced between 3.42 and 6.06 times during the period.
- A higher inventory turnover ratio suggests efficient management of inventory, but the fluctuations may indicate varying sales patterns or inventory management practices.

2. Receivables turnover:
- The receivables turnover ratio has been relatively consistent, ranging from 35.10 to 49.19. This indicates the number of times receivables are collected and replaced within a period.
- A higher turnover ratio suggests the company efficiently collects payments from customers, which is essential for maintaining healthy cash flows.

3. Payables turnover:
- The payables turnover ratio has fluctuated, ranging from 7.72 to 14.94. This ratio reflects how quickly the company pays its suppliers.
- A higher turnover ratio indicates that the company is paying its suppliers more quickly. However, drastic fluctuations in this ratio may signal changes in payment practices or supplier relationships.

4. Working capital turnover:
- The working capital turnover ratio has varied significantly over the periods, showing how efficiently the company utilizes its working capital to generate sales.
- A higher turnover ratio indicates that the company is effectively using its working capital to generate revenue. The significant fluctuations in this ratio may be attributed to changes in the working capital management strategies or business operations.

Overall, analyzing these activity ratios provides insights into Victoria's Secret & Co's operational efficiency and effectiveness in managing its assets and liabilities.

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Average number of days

Days of inventory on hand (DOH) measures how many days a company takes to sell its inventory. A lower DOH indicates that the company is more efficient in managing its inventory. Based on the data provided, Victoria's Secret & Co's DOH has fluctuated over the past eight quarters, with a significant decrease from around 106 days in October 2023 to approximately 60 days in February 2024. This indicates that the company has been able to sell its inventory more quickly in the latest period, which may lead to lower holding costs and potentially increased liquidity.

Days of sales outstanding (DSO) reflects how long it takes for a company to collect payments from its customers. A lower DSO indicates that the company is efficient in collecting receivables. Victoria's Secret & Co's DSO has also varied over the quarters, with a slight increase from 7.42 days in April 2023 to 9.12 days in February 2024. Despite this increase, the DSO for February 2024 is still relatively low, suggesting that the company is prompt in collecting payments from customers.

Number of days of payables represents the average number of days a company takes to pay its suppliers. A higher number of days indicates that the company is taking longer to settle its payables. Victoria's Secret & Co's days of payables have fluctuated, with a downward trend from around 47 days in July 2023 to approximately 31 days in February 2024. This improvement suggests that the company has been able to manage its payables more effectively, potentially improving its relationships with suppliers and preserving cash flow.

Overall, based on the analysis of activity ratios for Victoria's Secret & Co, the company has shown improvements in inventory management and payables while maintaining efficient receivables collection practices over the past eight quarters.

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Long-term

The fixed asset turnover ratio measures how efficiently a company is generating sales from its fixed assets. Victoria's Secret & Co has maintained a relatively stable fixed asset turnover ratio, averaging around 7 over the past few quarters. This indicates that the company is generating approximately 7 times its fixed assets value in sales.

On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from all its assets, including both fixed and current assets. Victoria's Secret & Co's total asset turnover ratio has shown some fluctuation but has generally ranged between 1.29 and 1.65 in recent quarters. This implies that the company is generating sales equivalent to its total assets value between 1.29 to 1.65 times.

Overall, both ratios suggest that Victoria's Secret & Co is efficiently utilizing its assets to generate sales, with the fixed asset turnover ratio specifically highlighting the effectiveness of the company's use of fixed assets in generating revenue.