Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Dollar Tree Inc., short-term (operating) activity ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-10-29), 10-Q (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-K (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-Q (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-K (reporting date: 2021-01-30), 10-Q (reporting date: 2020-10-31), 10-Q (reporting date: 2020-08-01), 10-Q (reporting date: 2020-05-02), 10-K (reporting date: 2020-02-01), 10-Q (reporting date: 2019-11-02), 10-Q (reporting date: 2019-08-03), 10-Q (reporting date: 2019-05-04), 10-K (reporting date: 2019-02-02), 10-Q (reporting date: 2018-11-03), 10-Q (reporting date: 2018-08-04), 10-Q (reporting date: 2018-05-05), 10-K (reporting date: 2018-02-03), 10-Q (reporting date: 2017-10-28), 10-Q (reporting date: 2017-07-29), 10-Q (reporting date: 2017-04-29).
- Inventory Turnover
- The inventory turnover ratio showed fluctuations over the observed periods, starting at 5.02 and generally trending downward to 3.36 by the end. There were intermittent peaks near 5.31 and 5.27, indicating occasional improvements in inventory management efficiency. However, the overall decline suggests that the company was slower in converting inventory into sales towards the later periods.
- Payables Turnover
- The payables turnover ratio experienced some variability, beginning around 11.81 and moving between lows of approximately 9.2 and highs of around 13.57. It notably declined during the final periods to values near 9.34 and 10.2. This pattern indicates changes in the pace at which the company settled its payables, with a tendency toward longer payment periods over time.
- Working Capital Turnover
- Working capital turnover showed substantial volatility, with extreme spikes in the middle periods reaching values as high as 94.38 and 86.5, followed by a significant decrease to a range between approximately 13.42 and 27.84 in later periods. These fluctuations suggest inconsistent utilization of working capital, possibly reflecting shifts in business operations, seasonal effects, or working capital structure changes.
- Average Inventory Processing Period
- The average number of days to process inventory generally increased over time, starting at 73 days and rising steadily to over 100 days toward the end of the timeline. This increase aligns with the decreasing inventory turnover and suggests slower inventory turnover, implying possible challenges in inventory management or sales performance.
- Average Payables Payment Period
- The average payables payment period mostly remained steady around 28 to 33 days initially, but lengthened to a higher range of 35 to 40 days in the final periods. This increase in days payable may indicate a strategic decision to extend payment terms to suppliers, potentially for cash flow management reasons.
Turnover Ratios
Average No. Days
Inventory Turnover
Dollar Tree Inc., inventory turnover calculation (quarterly data)
| Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | Feb 2, 2019 | Nov 3, 2018 | Aug 4, 2018 | May 5, 2018 | Feb 3, 2018 | Oct 28, 2017 | Jul 29, 2017 | Apr 29, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||
| Cost of sales | 4,865,100) | 4,640,900) | 4,559,600) | 4,940,300) | 4,651,700) | 4,479,200) | 4,512,700) | 4,615,100) | 4,252,600) | 4,361,400) | 4,491,900) | 4,354,800) | 4,041,700) | 4,092,100) | 4,081,500) | 4,293,100) | 3,866,900) | 3,861,700) | 3,854,100) | 4,259,600) | 3,650,600) | 3,653,400) | 3,660,000) | |||||||
| Merchandise inventories | 5,657,700) | 5,422,200) | 4,801,100) | 4,367,300) | 4,316,000) | 3,667,700) | 3,604,600) | 3,427,000) | 3,792,300) | 3,275,700) | 3,198,500) | 3,522,000) | 3,882,900) | 3,470,900) | 3,325,500) | 3,536,000) | 3,715,600) | 3,288,200) | 3,248,200) | 3,169,300) | 3,397,800) | 2,928,500) | 2,878,400) | |||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||
| Inventory turnover1 | 3.36 | 3.47 | 3.88 | 4.26 | 4.23 | 4.87 | 4.92 | 5.17 | 4.60 | 5.27 | 5.31 | 4.70 | 4.25 | 4.71 | 4.84 | 4.49 | 4.26 | 4.75 | 4.75 | 4.80 | 4.35 | 4.99 | 5.02 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Inventory Turnover, Competitors2 | ||||||||||||||||||||||||||||||
| Costco Wholesale Corp. | 12.68 | 12.82 | 10.94 | 11.13 | 10.81 | 11.14 | 10.46 | 12.01 | 11.62 | 11.19 | 10.08 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Target Corp. | 4.73 | 5.19 | 5.09 | 5.39 | 4.86 | 6.22 | 6.49 | 6.21 | 4.94 | 6.78 | 6.65 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Walmart Inc. | 7.01 | 7.40 | 7.06 | 7.59 | 7.46 | 8.88 | 9.09 | 9.35 | 7.96 | 9.94 | 9.79 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2022-10-29), 10-Q (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-K (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-Q (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-K (reporting date: 2021-01-30), 10-Q (reporting date: 2020-10-31), 10-Q (reporting date: 2020-08-01), 10-Q (reporting date: 2020-05-02), 10-K (reporting date: 2020-02-01), 10-Q (reporting date: 2019-11-02), 10-Q (reporting date: 2019-08-03), 10-Q (reporting date: 2019-05-04), 10-K (reporting date: 2019-02-02), 10-Q (reporting date: 2018-11-03), 10-Q (reporting date: 2018-08-04), 10-Q (reporting date: 2018-05-05), 10-K (reporting date: 2018-02-03), 10-Q (reporting date: 2017-10-28), 10-Q (reporting date: 2017-07-29), 10-Q (reporting date: 2017-04-29).
1 Q3 2023 Calculation
Inventory turnover
= (Cost of salesQ3 2023
+ Cost of salesQ2 2023
+ Cost of salesQ1 2023
+ Cost of salesQ4 2022)
÷ Merchandise inventories
= (4,865,100 + 4,640,900 + 4,559,600 + 4,940,300)
÷ 5,657,700 = 3.36
2 Click competitor name to see calculations.
- Cost of Sales
- The cost of sales displays an overall upward trend over the analyzed periods, rising from approximately $3.66 billion in April 2017 to around $4.87 billion by October 2022. Notable increments occur in early 2018 and early 2022, suggesting increased buying or price pressures. While there are some fluctuations, the general pattern indicates growth in cost of goods sold aligning with company expansion or increased volume.
- Merchandise Inventories
- Merchandise inventories illustrate a significant and consistent increase over the timeframe, starting near $2.88 billion in April 2017 and reaching approximately $5.66 billion in October 2022. This sustained rise suggests a buildup of stock levels possibly in response to increasing demand, supply chain considerations, or preparation for future sales. Seasonal or quarter-specific fluctuations are visible but the dominant trend is inventory growth, particularly strong post-2020.
- Inventory Turnover Ratio
- The inventory turnover ratio shows a declining trend from 5.02 at the beginning of the period to 3.36 by the end. This decline suggests that inventory is being sold less frequently relative to its average stock level. Despite some oscillations, the ratio has generally decreased, indicating slower movement of inventory or possible overstocking. The variation in turnover aligns inversely with the sharp increase in inventory values, pointing to potential inefficiencies or shifts in inventory management strategies.
- Summary Insights
- The analyzed financial indicators suggest that while costs related to sales have increased, likely reflecting growing business scale, the inventory levels have risen even more significantly. The decreasing inventory turnover ratio reinforces this perspective, highlighting slower inventory liquidation rates. This combination may indicate challenges in inventory management or changing market dynamics impacting stock replenishment and sales velocities. Close monitoring of inventory efficiency and cost control measures would be advisable going forward.
Payables Turnover
Dollar Tree Inc., payables turnover calculation (quarterly data)
| Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | Feb 2, 2019 | Nov 3, 2018 | Aug 4, 2018 | May 5, 2018 | Feb 3, 2018 | Oct 28, 2017 | Jul 29, 2017 | Apr 29, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||
| Cost of sales | 4,865,100) | 4,640,900) | 4,559,600) | 4,940,300) | 4,651,700) | 4,479,200) | 4,512,700) | 4,615,100) | 4,252,600) | 4,361,400) | 4,491,900) | 4,354,800) | 4,041,700) | 4,092,100) | 4,081,500) | 4,293,100) | 3,866,900) | 3,861,700) | 3,854,100) | 4,259,600) | 3,650,600) | 3,653,400) | 3,660,000) | |||||||
| Accounts payable | 1,864,200) | 2,011,300) | 1,794,100) | 1,884,200) | 1,984,800) | 1,559,600) | 1,520,700) | 1,480,500) | 1,587,200) | 1,481,000) | 1,336,900) | 1,336,500) | 1,473,100) | 1,455,400) | 1,186,500) | 1,416,400) | 1,365,100) | 1,241,700) | 1,181,500) | 1,174,800) | 1,181,300) | 1,196,300) | 1,223,900) | |||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||
| Payables turnover1 | 10.20 | 9.34 | 10.38 | 9.86 | 9.20 | 11.45 | 11.67 | 11.97 | 11.00 | 11.65 | 12.70 | 12.40 | 11.21 | 11.22 | 13.57 | 11.21 | 11.61 | 12.58 | 13.05 | 12.96 | 12.52 | 12.22 | 11.81 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Payables Turnover, Competitors2 | ||||||||||||||||||||||||||||||
| Costco Wholesale Corp. | 12.28 | 12.56 | 11.07 | 11.17 | 10.80 | 10.74 | 9.06 | 10.49 | 10.45 | 10.79 | 8.83 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Target Corp. | 5.25 | 5.34 | 5.46 | 4.84 | 4.47 | 5.54 | 5.88 | 5.15 | 4.42 | 5.61 | 5.94 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Walmart Inc. | 7.93 | 8.18 | 8.17 | 7.76 | 7.50 | 8.55 | 8.75 | 8.55 | 7.62 | 8.81 | 9.15 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2022-10-29), 10-Q (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-K (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-Q (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-K (reporting date: 2021-01-30), 10-Q (reporting date: 2020-10-31), 10-Q (reporting date: 2020-08-01), 10-Q (reporting date: 2020-05-02), 10-K (reporting date: 2020-02-01), 10-Q (reporting date: 2019-11-02), 10-Q (reporting date: 2019-08-03), 10-Q (reporting date: 2019-05-04), 10-K (reporting date: 2019-02-02), 10-Q (reporting date: 2018-11-03), 10-Q (reporting date: 2018-08-04), 10-Q (reporting date: 2018-05-05), 10-K (reporting date: 2018-02-03), 10-Q (reporting date: 2017-10-28), 10-Q (reporting date: 2017-07-29), 10-Q (reporting date: 2017-04-29).
1 Q3 2023 Calculation
Payables turnover
= (Cost of salesQ3 2023
+ Cost of salesQ2 2023
+ Cost of salesQ1 2023
+ Cost of salesQ4 2022)
÷ Accounts payable
= (4,865,100 + 4,640,900 + 4,559,600 + 4,940,300)
÷ 1,864,200 = 10.20
2 Click competitor name to see calculations.
- Cost of Sales
- The cost of sales exhibits a generally increasing trend over the periods analyzed. Starting at approximately $3.66 billion, it experiences fluctuations but overall rises to about $4.87 billion by the end of the last period. Notably, there are intermittent decreases, for instance, a drop after February 2020 until October 2020, followed by a significant increase thereafter. The consistent upward trajectory from early 2021 through 2022 suggests growing operational activity or inflationary pressures impacting procurement costs.
- Accounts Payable
- Accounts payable show variability throughout the periods, beginning near $1.22 billion and experiencing both increments and declines. There is a general tendency for payables to increase over time, reaching highs above $2 billion towards the very end of the series. The pattern indicates that the company is progressively extending payment terms or increasing its purchases on credit, which could be a strategic approach to cash flow management or reflective of supplier negotiations.
- Payables Turnover Ratio
- The payables turnover ratio demonstrates a declining trend over the periods monitored, descending from above 12 to figures closer to 9-10 in the most recent periods. This reduction implies that the company is taking longer to settle its trade payables relative to its cost of sales. Such a pattern often indicates extended credit usage or delayed payments to suppliers, which may enhance short-term liquidity but could impact supplier relationships or credit terms.
- Overall Insights
- The concurrent increase in cost of sales and accounts payable, coupled with a decrease in payables turnover ratio, suggests a shift toward extended payment periods with suppliers. While cost of sales growth reflects expanded operational demands or rising input costs, the lengthening payment cycle may serve as a financial strategy to manage working capital. Continuous monitoring is advisable to ensure that extended payment terms do not adversely affect supplier relationships or lead to less favorable credit conditions.
Working Capital Turnover
Dollar Tree Inc., working capital turnover calculation (quarterly data)
| Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | Feb 2, 2019 | Nov 3, 2018 | Aug 4, 2018 | May 5, 2018 | Feb 3, 2018 | Oct 28, 2017 | Jul 29, 2017 | Apr 29, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||
| Current assets | 6,446,600) | 6,377,300) | 6,282,300) | 5,609,200) | 5,374,500) | 4,648,100) | 5,304,900) | 5,050,800) | 5,171,000) | 5,232,500) | 5,165,400) | 4,269,400) | 4,572,300) | 4,340,800) | 4,246,100) | 4,293,300) | 4,749,500) | 4,272,800) | 4,042,000) | 4,576,300) | 3,972,600) | 3,815,200) | 4,278,100) | |||||||
| Less: Current liabilities | 4,683,100) | 4,380,500) | 4,289,900) | 4,176,600) | 4,291,200) | 3,722,700) | 3,902,200) | 3,730,300) | 4,042,300) | 4,278,800) | 4,504,200) | 3,546,500) | 4,179,700) | 4,094,000) | 3,979,300) | 2,095,700) | 2,135,700) | 1,907,400) | 1,917,200) | 2,859,100) | 2,039,900) | 2,084,700) | 2,240,600) | |||||||
| Working capital | 1,763,500) | 1,996,800) | 1,992,400) | 1,432,600) | 1,083,300) | 925,400) | 1,402,700) | 1,320,500) | 1,128,700) | 953,700) | 661,200) | 722,900) | 392,600) | 246,800) | 266,800) | 2,197,600) | 2,613,800) | 2,365,400) | 2,124,800) | 1,717,200) | 1,932,700) | 1,730,500) | 2,037,500) | |||||||
| Net sales | 6,936,600) | 6,765,300) | 6,900,100) | 7,077,400) | 6,415,400) | 6,340,200) | 6,476,800) | 6,767,300) | 6,176,700) | 6,277,600) | 6,286,800) | 6,315,300) | 5,746,200) | 5,740,600) | 5,808,700) | 6,205,200) | 5,538,800) | 5,525,600) | 5,553,700) | 6,360,600) | 5,316,600) | 5,281,200) | 5,287,100) | |||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||
| Working capital turnover1 | 15.70 | 13.60 | 13.42 | 18.37 | 24.00 | 27.84 | 18.32 | 19.32 | 22.20 | 25.82 | 36.43 | 32.66 | 59.86 | 94.38 | 86.50 | 10.39 | 8.79 | 9.62 | 10.59 | 12.95 | 11.13 | 12.25 | 10.27 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Working Capital Turnover, Competitors2 | ||||||||||||||||||||||||||||||
| Costco Wholesale Corp. | 89.52 | 126.82 | 209.37 | 319.10 | 183.50 | 202.13 | 391.97 | 3,000.81 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Target Corp. | — | — | — | — | — | 124.01 | 73.63 | 148.27 | 93.09 | 48.90 | 394.58 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2022-10-29), 10-Q (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-K (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-Q (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-K (reporting date: 2021-01-30), 10-Q (reporting date: 2020-10-31), 10-Q (reporting date: 2020-08-01), 10-Q (reporting date: 2020-05-02), 10-K (reporting date: 2020-02-01), 10-Q (reporting date: 2019-11-02), 10-Q (reporting date: 2019-08-03), 10-Q (reporting date: 2019-05-04), 10-K (reporting date: 2019-02-02), 10-Q (reporting date: 2018-11-03), 10-Q (reporting date: 2018-08-04), 10-Q (reporting date: 2018-05-05), 10-K (reporting date: 2018-02-03), 10-Q (reporting date: 2017-10-28), 10-Q (reporting date: 2017-07-29), 10-Q (reporting date: 2017-04-29).
1 Q3 2023 Calculation
Working capital turnover
= (Net salesQ3 2023
+ Net salesQ2 2023
+ Net salesQ1 2023
+ Net salesQ4 2022)
÷ Working capital
= (6,936,600 + 6,765,300 + 6,900,100 + 7,077,400)
÷ 1,763,500 = 15.70
2 Click competitor name to see calculations.
The financial data reveals significant fluctuations across key performance indicators over the analyzed periods. Working capital exhibits an overall declining trend from early periods into mid-phase, with initial values in the range of approximately 2.0 to 2.6 billion US dollars, followed by a sharp reduction to levels below 300 million in several subsequent quarters before recovering somewhat toward the later dates but not reaching earlier peak levels.
Net sales demonstrate periodic variations without a clear linear progression. Sales figures generally oscillate around the five to seven billion US dollar mark but experience notable increases in certain quarters, particularly at the start of 2018 and early 2021, where sales peak above six to seven billion dollars. However, there are intermittent declines following these peaks, indicating variability in sales performance over time.
Working capital turnover ratios show an intriguing pattern, reflecting the relationship between net sales and working capital. Initial periods indicate modest turnover ratios, consistently ranging between approximately 9.5 and 13.0 times. A striking anomaly appears in mid-phase periods, with ratios spiking dramatically to values often exceeding 30 and even reaching above 90 and nearly 100 times, corresponding with notably low working capital levels. This suggests a temporary surge in sales efficiency relative to the diminished working capital base during these quarters. Subsequently, turnover ratios decline steadily, stabilizing in a more moderate range between 13 and 27 times in recent periods.
Overall, the data suggest that the company has experienced periods of tight liquidity or reduced working capital, which amplified turnover ratios, indicating intensive utilization of working capital to generate sales. Concurrently, net sales remain relatively robust with fluctuating performance, possibly influenced by market or operational factors. The recovery of working capital in later periods hints at a strategic realignment or improvement in capital management, while sales maintain a generally steady but non-linear trend. The interplay of these items emphasizes the dynamic nature of the company’s operational efficiency and capital deployment over the quarters analyzed.
- Working Capital
- Displays a notable reduction mid-series, dropping from multi-billion values to levels as low as a few hundred thousand dollars, before partial recovery in later quarters.
- Net Sales
- Exhibits fluctuations around a several-billion-dollar range, with peaks and troughs reflecting changing sales momentum without a definitive upward or downward trend.
- Working Capital Turnover
- Varies widely, with exceptional spikes correlating to periods of low working capital, followed by a decline and stabilization indicative of adjusted working capital management and sales generation efficiency.
Average Inventory Processing Period
Dollar Tree Inc., average inventory processing period calculation (quarterly data)
| Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | Feb 2, 2019 | Nov 3, 2018 | Aug 4, 2018 | May 5, 2018 | Feb 3, 2018 | Oct 28, 2017 | Jul 29, 2017 | Apr 29, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||
| Inventory turnover | 3.36 | 3.47 | 3.88 | 4.26 | 4.23 | 4.87 | 4.92 | 5.17 | 4.60 | 5.27 | 5.31 | 4.70 | 4.25 | 4.71 | 4.84 | 4.49 | 4.26 | 4.75 | 4.75 | 4.80 | 4.35 | 4.99 | 5.02 | |||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||||||||
| Average inventory processing period1 | 109 | 105 | 94 | 86 | 86 | 75 | 74 | 71 | 79 | 69 | 69 | 78 | 86 | 78 | 75 | 81 | 86 | 77 | 77 | 76 | 84 | 73 | 73 | |||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | ||||||||||||||||||||||||||||||
| Costco Wholesale Corp. | 29 | 28 | 33 | 33 | 34 | 33 | 35 | 30 | 31 | 33 | 36 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Target Corp. | 77 | 70 | 72 | 68 | 75 | 59 | 56 | 59 | 74 | 54 | 55 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Walmart Inc. | 52 | 49 | 52 | 48 | 49 | 41 | 40 | 39 | 46 | 37 | 37 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2022-10-29), 10-Q (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-K (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-Q (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-K (reporting date: 2021-01-30), 10-Q (reporting date: 2020-10-31), 10-Q (reporting date: 2020-08-01), 10-Q (reporting date: 2020-05-02), 10-K (reporting date: 2020-02-01), 10-Q (reporting date: 2019-11-02), 10-Q (reporting date: 2019-08-03), 10-Q (reporting date: 2019-05-04), 10-K (reporting date: 2019-02-02), 10-Q (reporting date: 2018-11-03), 10-Q (reporting date: 2018-08-04), 10-Q (reporting date: 2018-05-05), 10-K (reporting date: 2018-02-03), 10-Q (reporting date: 2017-10-28), 10-Q (reporting date: 2017-07-29), 10-Q (reporting date: 2017-04-29).
1 Q3 2023 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 3.36 = 109
2 Click competitor name to see calculations.
- Inventory Turnover Ratio
- The inventory turnover ratio demonstrates a fluctuating trend over the reported quarters. Beginning at 5.02, it experienced a slight decline to 4.35 in the later part of 2017, indicating slower inventory movement. Following this, the ratio showed a moderate recovery and stabilization around the mid-4 range through much of 2018 and 2019. Around early 2020, the ratio increased to above 5, peaking at 5.31, suggesting improved efficiency in inventory management at that time. However, from 2021 onwards, a consistent downward trend is observed, declining gradually from around 4.87 to a low of 3.36 by the last reported quarter in late 2022. This declining trend implies a reduction in the frequency with which inventory is sold and replaced, pointing to potential challenges in inventory turnover or changes in demand or supply chain dynamics.
- Average Inventory Processing Period
- The average inventory processing period, which inversely relates to the inventory turnover ratio, reflects the number of days inventory remains before being sold. Initially, this period rested in the low 70s, around 73 days, but it increased to mid-80s by the end of 2017 and showed a relatively stable pattern through 2018 and 2019, averaging near 77 to 86 days. Notably, in early 2020, there was a reduction to the high 60s, indicating faster inventory processing in that period, which aligns with the peak seen in turnover ratio. Following this period, a gradual and then more pronounced increase is noted, with days rising from the low 70s to surpassing 100 days by late 2022. The extended processing period over recent quarters signals slower sales or longer holding times for inventory, reinforcing the observations from the turnover ratio trend and suggesting potential inventory management inefficiencies or market conditions impacting sales velocity.
- Overall Insights
- Together, these metrics depict a cycle of inventory efficiency that peaked around early 2020, followed by a deterioration in inventory turnover and an increase in days inventory held. The recent increase in inventory processing duration and decline in turnover ratio might warrant further investigation into factors such as supply chain disruptions, changes in consumer demand, or inventory stocking policies. These trends could have implications for working capital management and operational effectiveness in inventory control.
Average Payables Payment Period
Dollar Tree Inc., average payables payment period calculation (quarterly data)
| Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | Feb 2, 2019 | Nov 3, 2018 | Aug 4, 2018 | May 5, 2018 | Feb 3, 2018 | Oct 28, 2017 | Jul 29, 2017 | Apr 29, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||
| Payables turnover | 10.20 | 9.34 | 10.38 | 9.86 | 9.20 | 11.45 | 11.67 | 11.97 | 11.00 | 11.65 | 12.70 | 12.40 | 11.21 | 11.22 | 13.57 | 11.21 | 11.61 | 12.58 | 13.05 | 12.96 | 12.52 | 12.22 | 11.81 | |||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||||||||
| Average payables payment period1 | 36 | 39 | 35 | 37 | 40 | 32 | 31 | 30 | 33 | 31 | 29 | 29 | 33 | 33 | 27 | 33 | 31 | 29 | 28 | 28 | 29 | 30 | 31 | |||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||||||||
| Average Payables Payment Period, Competitors2 | ||||||||||||||||||||||||||||||
| Costco Wholesale Corp. | 30 | 29 | 33 | 33 | 34 | 34 | 40 | 35 | 35 | 34 | 41 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Target Corp. | 70 | 68 | 67 | 75 | 82 | 66 | 62 | 71 | 83 | 65 | 61 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Walmart Inc. | 46 | 45 | 45 | 47 | 49 | 43 | 42 | 43 | 48 | 41 | 40 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2022-10-29), 10-Q (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-K (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-Q (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-K (reporting date: 2021-01-30), 10-Q (reporting date: 2020-10-31), 10-Q (reporting date: 2020-08-01), 10-Q (reporting date: 2020-05-02), 10-K (reporting date: 2020-02-01), 10-Q (reporting date: 2019-11-02), 10-Q (reporting date: 2019-08-03), 10-Q (reporting date: 2019-05-04), 10-K (reporting date: 2019-02-02), 10-Q (reporting date: 2018-11-03), 10-Q (reporting date: 2018-08-04), 10-Q (reporting date: 2018-05-05), 10-K (reporting date: 2018-02-03), 10-Q (reporting date: 2017-10-28), 10-Q (reporting date: 2017-07-29), 10-Q (reporting date: 2017-04-29).
1 Q3 2023 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 10.20 = 36
2 Click competitor name to see calculations.
The analysis of the payables turnover ratio and the average payables payment period over multiple quarters reveals notable trends and shifts in the company's management of its accounts payable.
- Payables Turnover
- The payables turnover ratio demonstrates variability over the observed periods. Initially, there is a gradual increase from 11.81 to a peak around 13.05, reflecting a faster rate of payment to suppliers during this earlier timeframe. Following this peak, the ratio declines and fluctuates around the 11 to 12 range, indicating a moderate slowing in payment velocity. More recently, from late 2021 to late 2022, the turnover ratio declines further to values near 9.2 to 10.38, suggestive of a slower turnover rate and potentially extended payment terms or delays.
- Average Payables Payment Period
- The average payables payment period aligns inversely with the turnover ratio, as expected. It decreases from 31 days to a low of 28 days early on, indicating quicker payments. Subsequently, the payment period increases and experiences notable fluctuations between 27 and 33 days over the middle quarters. Toward the most recent quarters, the payment period extends significantly, peaking at 40 days and then slightly retracting to values in the high 30s. This upward trend in days payable suggests that the company has been taking longer to settle its payables.
In summary, the company's payables management appeared to be more efficient in earlier periods, with higher turnover ratios and shorter payment periods. However, in the later periods, especially from 2021 onward, there is a clear trend toward reduced payables turnover and longer payment periods. This may indicate a strategic decision to extend payment terms, potential liquidity considerations, or changes in supplier negotiation dynamics. The variability observed underscores the evolving approach to managing short-term liabilities over time.