Vestis Corporation (VSTS)

Short-term

Turnover ratios

Inventory turnover measures how efficiently a company manages its inventory by indicating how many times inventory is sold and replaced over a period. Vestis Corporation's inventory turnover has shown a consistent increasing trend from 3.27 in March 2023 to 16.04 in March 2024, indicating an improvement in inventory management efficiency.

Receivables turnover reflects the effectiveness of the company in collecting outstanding receivables. Vestis Corporation experienced fluctuation in its receivables turnover over the analyzed period, ranging from 6.92 to 15.83. The significant increase in September 2024 compared to previous periods suggests a substantial improvement in collecting receivables.

Payables turnover measures how quickly a company pays its suppliers. Vestis Corporation's payables turnover has been relatively stable, with values ranging from 15.42 to 16.28. Consistent payables turnover indicates the company's ability to effectively manage its payables, maintaining good relationships with suppliers.

Working capital turnover demonstrates how efficiently a company utilizes its working capital to generate sales revenue. Vestis Corporation's working capital turnover has shown variability over time, with values ranging from 4.16 to 8.47. A higher working capital turnover ratio indicates that the company is generating more revenue per unit of working capital, reflecting efficient utilization of resources.

Overall, based on the activity ratios analyzed, Vestis Corporation has displayed improvements in inventory management efficiency and receivables turnover. Additionally, the company appears to maintain stable payables turnover and moderate working capital turnover, suggesting effective utilization of resources and sound financial management practices.

---

Average number of days

Days of Inventory on Hand (DOH):
- Vestis Corporation has managed to reduce its days of inventory on hand steadily over the last few quarters, from 106.29 days in Q3 2023 to 23.50 days in Q3 2024. This indicates efficient inventory management and a quicker turnover of goods, which can reduce holding costs and minimize carrying risks.

Days of Sales Outstanding (DSO):
- The days of sales outstanding for Vestis Corporation have shown fluctuation over the last few quarters, with a significant decrease from 52.73 days in Q2 2024 to 23.06 days in Q3 2024. This could suggest improvements in the company's accounts receivable collection efficiency, leading to faster cash conversion cycles.

Number of Days of Payables:
- Vestis Corporation's number of days of payables has been relatively stable over the quarters, with a slight increase from 22.42 days in Q4 2023 to 23.23 days in Q3 2024. This indicates the company's ability to manage its payables effectively without affecting its relationships with suppliers.

Overall, the activity ratios of Vestis Corporation reflect a positive trend towards more efficient management of inventory, receivables, and payables, which bodes well for the company's working capital management and overall operational performance.

---

Long-term

The fixed asset turnover ratio for Vestis Corporation has shown a consistent increasing trend over the past few quarters, starting at 3.86 in March 2023 and reaching 4.35 by March 2024. This indicates that the company is generating more sales revenue relative to its investment in fixed assets, which suggests improved efficiency in utilizing these assets to generate revenue.

On the other hand, the total asset turnover ratio has been relatively stable, hovering around 0.90 for the most part. This suggests that Vestis Corporation is consistently generating sales revenue in relation to its total assets, indicating a steady level of efficiency in utilizing all assets, both fixed and current, to generate sales.

Overall, the trend in both the fixed asset turnover and total asset turnover ratios suggests that Vestis Corporation has been effectively managing its assets to generate sales revenue, with a particular improvement noted for fixed asset turnover. This could potentially indicate increased productivity and efficiency in the company's operations and could be a positive sign for its long-term profitability.