Williams-Sonoma Inc (WSM)
Activity ratios
Short-term
Turnover ratios
| Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | Feb 2, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 1.67 | 1.50 | 1.75 | 1.71 | 1.52 |
| Receivables turnover | 63.06 | 74.98 | 62.62 | 47.23 | 52.85 |
| Payables turnover | 3.42 | 4.29 | 3.56 | 3.18 | 3.21 |
| Working capital turnover | 9.23 | 21.71 | 14.93 | 10.97 | 40.43 |
Activity ratios provide insights into how efficiently a company is managing its assets and liabilities. Let's analyze the activity ratios of Williams-Sonoma Inc based on the data provided.
1. Inventory turnover:
- Williams-Sonoma's inventory turnover has been relatively stable over the past five years, ranging from 1.50 to 1.75.
- A higher inventory turnover ratio indicates that the company is effectively selling its inventory and replenishing it quickly.
- The slight increase in inventory turnover from 2023 to 2024 suggests improved inventory management efficiency.
2. Receivables turnover:
- Williams-Sonoma's receivables turnover has shown fluctuations over the five-year period, with a high of 74.98 in 2023 and a low of 47.23 in 2021.
- A higher receivables turnover ratio implies that the company is collecting its receivables more frequently.
- The significant drop in receivables turnover from 2023 to 2024 could indicate a change in the company's credit policies or customer payment behavior.
3. Payables turnover:
- The payables turnover ratio for Williams-Sonoma has been relatively stable around 3.2 to 4.3 over the five years.
- A higher payables turnover ratio suggests that the company is paying its suppliers more quickly.
- The consistency in payables turnover indicates a steady approach to managing trade payables.
4. Working capital turnover:
- Williams-Sonoma's working capital turnover has shown significant fluctuations, with a high of 40.43 in 2020 and a low of 9.23 in 2024.
- A higher working capital turnover ratio indicates that the company is efficiently utilizing its working capital to generate sales.
- The sharp decline in working capital turnover from 2020 to 2024 suggests potential changes in the company's working capital management strategies.
In conclusion, Williams-Sonoma's activity ratios demonstrate varying levels of efficiency in managing its inventory, receivables, payables, and working capital over the five-year period. Further analysis of underlying operational and financial factors impacting these ratios would be necessary to fully assess the company's performance and management of its resources.
Average number of days
| Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | Feb 2, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 218.63 | 243.59 | 208.79 | 212.86 | 240.07 |
| Days of sales outstanding (DSO) | days | 5.79 | 4.87 | 5.83 | 7.73 | 6.91 |
| Number of days of payables | days | 106.63 | 85.03 | 102.61 | 114.86 | 113.70 |
Days of Inventory on Hand (DOH) measures how many days it takes for a company to turn its inventory into sales. A lower number is generally preferred as it indicates efficient inventory management. Over the past five years, Williams-Sonoma Inc has shown some fluctuation in its DOH, with the latest figure at 218.63 days, down from 243.59 days the previous year.
Days of Sales Outstanding (DSO) measures how long it takes for a company to collect payment after a sale. A lower DSO indicates better management of accounts receivable. Williams-Sonoma Inc has maintained a relatively low DSO over the five years, with the latest figure at 5.79 days, slightly higher than the previous year's 4.87 days.
Number of Days of Payables measures how long it takes for a company to pay its suppliers. A longer payable period can indicate favorable credit terms. Williams-Sonoma Inc has shown an increasing trend in its payables days over the past five years, with the latest figure at 106.63 days, up from 85.03 days the previous year.
Overall, Williams-Sonoma Inc's activity ratios reflect some fluctuations in its inventory management efficiency and payment patterns to suppliers over the years. Further analysis and comparison with industry benchmarks would provide a clearer picture of the company's performance in managing its working capital.
See also:
Williams-Sonoma Inc Short-term (Operating) Activity Ratios
Long-term
| Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | Feb 2, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 7.65 | 8.14 | 8.96 | 7.77 | 6.36 |
| Total asset turnover | 1.47 | 1.86 | 1.78 | 1.46 | 1.46 |
The long-term activity ratios of Williams-Sonoma Inc, as indicated by the fixed asset turnover and total asset turnover ratios over the past five years, provide insights into the company's efficiency in utilizing its assets to generate revenue.
The fixed asset turnover ratio measures the company's ability to generate sales from its investment in fixed assets. Williams-Sonoma Inc has shown a consistent trend of high fixed asset turnover ratios over the past five years, ranging from 6.36 to 8.96. This indicates that the company has been successful in efficiently utilizing its fixed assets to generate sales, with a peak performance in the fiscal year ending January 30, 2022.
On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from all assets, including both fixed and current assets. Williams-Sonoma Inc has shown varying total asset turnover ratios over the same period, ranging from 1.46 to 1.86. While the ratios have fluctuated, they generally indicate that the company has been able to effectively generate sales relative to its total asset base.
Overall, the company's long-term activity ratios suggest that Williams-Sonoma Inc has been effectively managing its assets to generate sales, with a particularly strong performance in utilizing its fixed assets for revenue generation. However, further analysis and comparison with industry benchmarks may be necessary to fully assess the company's efficiency in asset utilization.