Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Hershey Co., long-term (investment) activity ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio exhibits relatively stable performance, starting at 3.66 in 2018 and slightly fluctuating over the years, reaching a low of 3.47 in 2021 before improving to 3.76 in 2022. This indicates a consistent ability to generate sales from net fixed assets, with an overall minor upward trend by the end of the period.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- When incorporating operating leases and right-of-use assets, the turnover ratio displays a more distinct declining trend, moving from 3.66 in 2018 down to 3.05 in 2021, followed by a moderate recovery to 3.37 in 2022. This suggests that accounting for leased assets reduces the efficiency measure initially, but the company appears to have improved asset utilization related to these leased assets recently.
- Total Asset Turnover
- The total asset turnover ratio shows a gradual decline from 1.01 in 2018 to 0.86 in 2021, before increasing back to 0.95 in 2022. This indicates a reduction in the company’s overall efficiency in using its assets to generate revenues over the earlier years, with a noticeable improvement in the latest year, possibly reflecting better asset management or increased sales relative to assets.
- Equity Turnover
- The equity turnover ratio demonstrates a continuous downward trend throughout the period analyzed, from 5.57 in 2018 to 3.16 in 2022. This persistent decrease implies that the company is generating lower sales per dollar of equity, which may suggest increasing equity base not matched by sales growth or a decrease in sales relative to the equity employed.
Net Fixed Asset Turnover
Hershey Co., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 10,419,294) | 8,971,337) | 8,149,719) | 7,986,252) | 7,791,069) | |
| Property, plant and equipment, net | 2,769,702) | 2,586,187) | 2,285,255) | 2,153,139) | 2,130,294) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 3.76 | 3.47 | 3.57 | 3.71 | 3.66 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Coca-Cola Co. | 4.37 | 3.90 | 3.06 | — | — | |
| Mondelēz International Inc. | 3.49 | 3.32 | 2.94 | — | — | |
| PepsiCo Inc. | 3.56 | 3.55 | 3.29 | — | — | |
| Philip Morris International Inc. | 4.73 | 5.09 | 4.51 | — | — | |
| Net Fixed Asset Turnover, Sector | ||||||
| Food, Beverage & Tobacco | 3.86 | 3.78 | 3.34 | — | — | |
| Net Fixed Asset Turnover, Industry | ||||||
| Consumer Staples | 5.21 | 5.06 | 4.37 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover = Net sales ÷ Property, plant and equipment, net
= 10,419,294 ÷ 2,769,702 = 3.76
2 Click competitor name to see calculations.
The financial data reveals observable trends in net sales, property, plant and equipment (PP&E), and net fixed asset turnover over the five-year period from 2018 to 2022.
- Net Sales
- Net sales exhibited a consistent upward trajectory throughout the period, increasing from approximately $7.79 billion in 2018 to about $10.42 billion in 2022. This represents a significant growth of roughly 34% over five years, indicating strong revenue expansion. The growth rate appears to accelerate notably between 2021 and 2022, where net sales increased by nearly 16%, higher than the earlier annual increments.
- Property, Plant and Equipment, Net (PP&E)
- The net value of PP&E shows a steady increase from around $2.13 billion in 2018 to approximately $2.77 billion in 2022. The increase is gradual but consistent, reflecting ongoing capital investments or asset retention. Between 2018 and 2019, the growth was relatively modest, followed by a sharper increase from 2020 onwards, culminating in an approximate 30% rise over the entire period.
- Net Fixed Asset Turnover Ratio
- This ratio, which measures how efficiently the company uses its fixed assets to generate sales, fluctuated over the years. It started at 3.66 in 2018, peaked slightly at 3.71 in 2019, then dipped to a low of 3.47 in 2021 before recovering to 3.76 in 2022. The lowest point in 2021 suggests a period of decreased asset utilization efficiency, potentially due to higher asset base growth relative to sales or operational challenges. The rebound in 2022 indicates improved efficiency, aligning with accelerated sales growth during the same year.
Overall, the data points to a company experiencing steady sales growth supported by incremental investments in fixed assets. The efficiency of asset utilization saw some volatility, particularly a dip in 2021, but ultimately improved by the end of the period, suggesting adaptive operational management in response to changing business conditions.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Hershey Co., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 10,419,294) | 8,971,337) | 8,149,719) | 7,986,252) | 7,791,069) | |
| Property, plant and equipment, net | 2,769,702) | 2,586,187) | 2,285,255) | 2,153,139) | 2,130,294) | |
| Operating lease ROU assets | 326,472) | 351,712) | 224,268) | 220,678) | —) | |
| Property, plant and equipment, net (including operating lease, right-of-use asset) | 3,096,174) | 2,937,899) | 2,509,523) | 2,373,817) | 2,130,294) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 3.37 | 3.05 | 3.25 | 3.36 | 3.66 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Coca-Cola Co. | 3.82 | 3.41 | 2.68 | — | — | |
| Mondelēz International Inc. | 3.25 | 3.10 | 2.75 | — | — | |
| PepsiCo Inc. | 3.24 | 3.25 | 3.05 | — | — | |
| Philip Morris International Inc. | 4.35 | 4.69 | 4.06 | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Food, Beverage & Tobacco | 3.51 | 3.45 | 3.05 | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Consumer Staples | 4.69 | 4.55 | 3.90 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= 10,419,294 ÷ 3,096,174 = 3.37
2 Click competitor name to see calculations.
The financial data reveals a generally positive growth trend over the analyzed periods, with notable fluctuations in certain efficiency metrics.
- Net Sales
- Net sales exhibit a consistent upward trajectory from 2018 to 2022. Beginning at approximately $7.79 billion in 2018, sales increased steadily each year, reaching over $10.42 billion by the end of 2022. This reflects robust revenue growth, particularly significant in the final year's increase, suggesting either increased market demand, pricing adjustments, or successful sales strategies.
- Property, Plant and Equipment, Net
- The net value of property, plant, and equipment, including operating lease right-of-use assets, also shows a rising trend over the same timeframe. The asset base grew from about $2.13 billion in 2018 to nearly $3.10 billion in 2022. This indicates ongoing investments in fixed assets, potentially reflecting capacity expansion, modernization efforts, or acquisition of additional operational facilities.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio, which measures efficiency in utilizing fixed assets to generate sales, shows a declining trend from 3.66 in 2018 to a low of 3.05 in 2021, followed by a partial recovery to 3.37 in 2022. The initial decline suggests that asset growth may have outpaced sales growth during the earlier years, possibly indicating underutilization or timing differences between investment and revenue realization. The rebound in 2022 might reflect improved operational efficiency or increased asset productivity relative to sales.
Overall, the data portrays a company experiencing steady revenue growth accompanied by significant capital investments. While asset utilization efficiency decreased for several years, recent improvement hints at potential optimization of resources. Continuous monitoring of the fixed asset turnover in relation to capital expenditures will be important to ensure that investments translate effectively into sales growth.
Total Asset Turnover
Hershey Co., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 10,419,294) | 8,971,337) | 8,149,719) | 7,986,252) | 7,791,069) | |
| Total assets | 10,948,820) | 10,412,231) | 9,131,845) | 8,140,395) | 7,703,020) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.95 | 0.86 | 0.89 | 0.98 | 1.01 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Coca-Cola Co. | 0.46 | 0.41 | 0.38 | — | — | |
| Mondelēz International Inc. | 0.44 | 0.43 | 0.39 | — | — | |
| PepsiCo Inc. | 0.94 | 0.86 | 0.76 | — | — | |
| Philip Morris International Inc. | 0.51 | 0.76 | 0.64 | — | — | |
| Total Asset Turnover, Sector | ||||||
| Food, Beverage & Tobacco | 0.61 | 0.60 | 0.54 | — | — | |
| Total Asset Turnover, Industry | ||||||
| Consumer Staples | 1.47 | 1.41 | 1.32 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Total asset turnover = Net sales ÷ Total assets
= 10,419,294 ÷ 10,948,820 = 0.95
2 Click competitor name to see calculations.
The analyzed data reveals several trends concerning the financial performance and position over the five-year period ending in 2022.
- Net Sales
- There is a consistent upward trajectory in net sales from 2018 through 2022. Sales increased from approximately 7.79 billion dollars in 2018 to over 10.42 billion dollars in 2022. The growth appears steady each year, with a notable acceleration in the most recent year, indicating successful revenue generation and potentially effective market strategies or expanded operations.
- Total Assets
- Total assets have also increased consistently throughout the period. Starting at roughly 7.70 billion dollars in 2018, assets grew to approximately 10.95 billion dollars by 2022. This expansion reflects an accumulation of resources and investments, suggesting ongoing capital acquisition or asset reinvestment supporting growth objectives.
- Total Asset Turnover
- The ratio of net sales to total assets shows a declining trend from 2018 to 2021, dropping from 1.01 to 0.86, followed by a partial recovery to 0.95 in 2022. This indicates reduced efficiency in utilizing assets to generate sales over the earlier years, which slightly improved in the last year. The decline may imply increasing asset base outpacing sales growth or less efficient asset use, while the recent improvement suggests some correction or better operational efficiency.
In summary, the data points to healthy revenue and asset growth, accompanied by fluctuations in asset efficiency. The organization appears to be expanding its asset base and sales volume, with attention needed to maintain or enhance the efficiency of asset use to support sustained profitability.
Equity Turnover
Hershey Co., equity turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 10,419,294) | 8,971,337) | 8,149,719) | 7,986,252) | 7,791,069) | |
| Total The Hershey Company stockholders’ equity | 3,299,544) | 2,757,229) | 2,234,352) | 1,739,222) | 1,398,721) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 3.16 | 3.25 | 3.65 | 4.59 | 5.57 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Coca-Cola Co. | 1.78 | 1.68 | 1.71 | — | — | |
| Mondelēz International Inc. | 1.17 | 1.02 | 0.96 | — | — | |
| PepsiCo Inc. | 5.04 | 4.95 | 5.23 | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Equity Turnover, Sector | ||||||
| Food, Beverage & Tobacco | 3.26 | 3.12 | 3.32 | — | — | |
| Equity Turnover, Industry | ||||||
| Consumer Staples | 5.26 | 5.06 | 4.98 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Equity turnover = Net sales ÷ Total The Hershey Company stockholders’ equity
= 10,419,294 ÷ 3,299,544 = 3.16
2 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited a consistent upward trend over the observed period. Beginning at approximately 7.79 billion US dollars in 2018, sales increased steadily each year, reaching over 10.42 billion US dollars by the end of 2022. This reflects a cumulative growth of about 34% over five years, indicating a sustained positive performance in revenue generation.
- Total Stockholders’ Equity
- The total stockholders’ equity increased significantly throughout the period. Starting from roughly 1.40 billion US dollars at the end of 2018, it grew to almost 3.30 billion US dollars by the end of 2022. This growth suggests that the company has accumulated substantial retained earnings and/or issued additional equity, thereby strengthening its financial base.
- Equity Turnover Ratio
- The equity turnover ratio, which measures the efficiency of the company in utilizing its equity to generate sales, demonstrated a declining trend. The ratio dropped from 5.57 in 2018 to 3.16 in 2022. This decline indicates that although net sales have been increasing, the rate of increase in equity has outpaced sales growth, leading to lower turnover. This could reflect higher equity financing or accumulated earnings relative to sales.
- Overall Analysis
- The data reveals robust growth in both net sales and equity over the five-year period, with net sales increasing moderately and equity more substantially. The decreasing equity turnover ratio suggests that the company’s asset base, supported by equity, has grown at a faster pace than sales. This pattern might imply a strategic choice to strengthen the company’s capital structure, potentially enhancing stability but reducing relative sales efficiency per unit of equity.