Lowe’s Cos. Inc. (NYSE:LOW)

Inventory Turnover

The inventory turnover ratio exhibits a consistent decline over the observed periods, decreasing steadily from 3.73 in early 2020 to 3.21 by early 2025. This trend suggests a lengthening in the time inventory remains on hand before being sold, indicating potentially slower inventory movement or possible overstocking issues.

Payables Turnover

Payables turnover shows some variability, starting at 6.42 in 2020, dipping to 5.51 in 2021, then gradually increasing again to a high of 6.61 in 2024 before slightly declining to 6.01 in 2025. This fluctuation indicates changing efficiency or strategies in managing payables, with some periods reflecting longer payment cycles and others quicker payments to suppliers.

Working Capital Turnover

The working capital turnover ratio exhibits highly irregular values across the years. The ratio sharply plunges from an exceptionally high 530.5 in 2020 to 24.92 in 2021, then shows volatility with a rise to 245.54 in 2022, followed by subsequent drops and rises in 2023 to 2025. These extreme swings are atypical and may reflect either data anomalies, changes in working capital accounting, or significant operational shifts affecting working capital efficiency.

Average Inventory Processing Period

The average inventory processing period has steadily increased from 98 days in 2020 to 114 days in 2025. This increment aligns with the declining inventory turnover ratio, reinforcing the observation of slower inventory movement and potential challenges in inventory management over time.

Average Payables Payment Period

The average payables payment period shows a moderate fluctuation, initially increasing from 57 days in 2020 to a peak of 66 days in 2021, then varying between 55 and 61 days through 2025. The initial increase could indicate a strategic extension of payment terms, followed by attempts to stabilize or reduce the duration of payables outstanding.

Missing Data Items

There is an absence of data for receivables turnover, average receivable collection period, operating cycle, and cash conversion cycle across all periods. The lack of this information limits the ability to fully assess the company's overall working capital management and cash flow efficiency.

The financial data over the six-year period demonstrates several notable trends in cost of sales, merchandise inventory, and inventory turnover.

Cost of Sales

There was a consistent increase in the cost of sales from 2020 to 2023, peaking at US$64,802 million in 2023. However, this was followed by a marked decline in 2024 and 2025, reaching US$55,797 million in 2025, suggesting a reduction in expenses related to goods sold over the most recent two years.

Merchandise Inventory, Net

Net merchandise inventory rose steadily from US$13,179 million in 2020 to a high of US$18,532 million in 2023. Subsequently, it decreased to US$16,894 million in 2024, before slightly rising again to US$17,409 million in 2025. This pattern indicates an initial accumulation of inventory followed by a partial reduction and adjustment to inventory levels in recent years.

Inventory Turnover

Inventory turnover ratio shows a gradual and continuous decline over the period, from 3.73 in 2020 to 3.21 in 2025. This downward trend suggests that the company is selling and replacing its inventory less frequently each year, indicative of either slower sales velocity, increased inventory holdings, or both.

Overall, the data indicates that inventory levels increased alongside rising costs of sales until 2023, followed by a reduction in sales costs and adjusted inventory holdings. The decline in inventory turnover ratio highlights a trend towards slower inventory movement. This combination may warrant further investigation into sales efficiency and inventory management practices to ensure optimal operational performance.

Net Sales

The net sales figures demonstrated an overall upward trend from 2020 through 2023, increasing from $72,148 million in January 2020 to a peak of $97,059 million in February 2023. This suggests a period of growth and expanded revenue generation.

However, starting in 2024, net sales began to decline, falling to $86,377 million in February 2024 and further reducing to $83,674 million by January 2025. This downward trend indicates potential challenges such as decreased market demand, increased competition, or other operational issues affecting sales volume or pricing power.

The highest recorded figure in the period was in early 2023, followed by a noticeable contraction in the subsequent years, which may warrant further investigation into underlying causes including external economic factors or internal company dynamics.

Accounts Receivable and Receivables Turnover

No data was available for accounts receivable or receivables turnover ratios during the reported periods. The absence of this data limits the ability to analyze the company’s efficiency in managing credit sales and collections, which could provide additional insight into working capital management.

Cost of Sales

The cost of sales exhibited an overall increasing trend from 49,205 million USD in early 2020 to a peak of 64,802 million USD in early 2023. Subsequently, it declined to 55,797 million USD by early 2025, indicating a reduction in direct costs associated with goods sold in the most recent period.

Accounts Payable

Accounts payable increased substantially from 7,659 million USD in early 2020 to 11,354 million USD in early 2022, then decreased to 8,704 million USD in early 2024 before a slight increase to 9,290 million USD in early 2025. This variation suggests fluctuations in the company's short-term liabilities, with a notable reduction in payables following 2022.

Payables Turnover Ratio

The payables turnover ratio declined from 6.42 in 2020 to a low of 5.51 in 2021, suggesting a slower payment cycle relative to cost of sales during that year. It then increased steadily to 6.61 in 2024, indicating faster payment of obligations. A minor decline to 6.01 in 2025 still reflects improved payment efficiency compared to the early years under review.

Overall Analysis

Cost of sales rose consistently until early 2023 before decreasing, while accounts payable peaked in early 2022 and then declined, evidencing a possible strategic effort to manage liabilities and cash outflows more effectively in recent years. The payables turnover ratio supports this interpretation, showing a more efficient payment process after 2021. These trends collectively imply efforts to optimize working capital management following a period of growth and expansion in cost structures.

Working Capital

The working capital values exhibit considerable fluctuations over the observed periods. Initially, working capital starts at a moderate level, then significantly increases by the fiscal year ending January 29, 2021. However, this is followed by a sharp decrease in the subsequent year. Afterward, working capital again rises substantially for the fiscal year ending February 2, 2024, before declining again in the most recent period reported.

Net Sales

Net sales demonstrate a general upward trend from January 31, 2020, reaching their peak around February 3, 2023. Despite this growth trend, there is a noticeable decrease in net sales in the last two recorded years, indicating a potential slowdown or contraction in revenue generation after the peak.

Working Capital Turnover

The working capital turnover ratio shows pronounced volatility. Beginning with an extremely high ratio, it then sharply decreases at the next period. The ratio climbs again substantially the following year before dropping yet again, reaching its lowest levels during fiscal years ending January 29, 2021, and February 2, 2024. The final period shows a marked increase again, reflecting changes in both working capital and sales efficiency.

Inventory Turnover

The inventory turnover ratio exhibits a gradual decline over the observed periods, decreasing from 3.73 in 2020 to 3.21 in 2025. This downward trend indicates a slowing rate at which inventory is sold and replaced, suggesting potential challenges in inventory management or changes in sales velocity.

Average Inventory Processing Period

The average inventory processing period correspondingly shows an increasing trend, rising from 98 days in 2020 to 114 days in 2025. This lengthening period implies that inventory is remaining in stock for longer durations before being sold, which aligns with the decrease in inventory turnover ratio.

Overall Trend Analysis

The inverse relationship between inventory turnover and average inventory processing period is evident and consistent across the timeline. The extension in inventory holding periods, coupled with decreasing turnover, may indicate slower inventory movement, potential overstocking, or changes in market demand or operational efficiency.

The available financial data for the specified period lacks quantitative values for the receivables turnover and average receivable collection period. Consequently, it is not possible to analyze trends or changes in these specific financial metrics.

Without detailed numeric data, assessment of the company’s efficiency in managing accounts receivable or changes in credit policies over the periods from January 2020 through January 2025 cannot be conducted. This absence of values restricts any meaningful evaluation of liquidity or operational performance based on these ratios.

It is recommended that complete and accurate data be provided for receivables turnover and average receivable collection period to enable thorough financial analysis and support informed decision-making.

The analysis of the provided financial data reveals discernible trends in inventory management over the six-year period from January 31, 2020, to January 31, 2025.

Average Inventory Processing Period

The average inventory processing period demonstrated a consistent upward trajectory throughout the years examined. Beginning at 98 days in the fiscal year ending January 31, 2020, the period remained stable through January 29, 2021. Subsequently, it increased to 100 days by January 28, 2022, followed by a steady rise, reaching 104 days in 2023, 107 days in 2024, and peaking at 114 days by January 31, 2025. This progression suggests a gradual elongation of the time taken to process inventory, which may indicate changes in inventory turnover efficiency, supply chain dynamics, or product demand patterns.

Average Receivable Collection Period

No data is available for the average receivable collection period across the given time frame, limiting the ability to analyze trends related to accounts receivable management or the efficiency in collecting customer payments.

Operating Cycle

Data for the operating cycle is not provided, preventing assessment of the combined duration of inventory processing and receivables collection activities.

Overall, the notable increase in the average inventory processing period suggests a lengthening in the company's inventory turn duration. This could impact working capital requirements and operational efficiency. The absence of data on receivables and the operating cycle means a comprehensive evaluation of cash conversion efficiency and working capital management is incomplete.

Payables Turnover

The payables turnover ratio exhibits some fluctuation over the observed periods. It starts at 6.42 in early 2020, decreases to a low of 5.51 in early 2021, then gradually rises to 6.61 by early 2024 before declining slightly to 6.01 in early 2025. This trend indicates an initial slowing in the frequency of payables payments followed by an improved turnover, suggesting more efficient management of payables, then a minor deceleration in turnover toward the end of the period.

Average Payables Payment Period

The average payables payment period, measured in days, shows an inverse relationship with the payables turnover ratio as expected. The payment period increases from 57 days in 2020 to a peak of 66 days in 2021, reflecting slower payment cycles. It then decreases steadily to 55 days by 2024, indicating faster payments to suppliers, before rising again to 61 days in 2025. This pattern suggests a temporary extension of payment terms or delayed settlements followed by efforts to shorten the payment cycle, then a slight lengthening in payment duration in the most recent period.

Overall Insights

Overall, the payables management shows adaptability with periods of both extended and shortened payment cycles. The shifts may reflect changing supplier relationships, cash flow management strategies, or market conditions influencing payment terms. The increase in payment period and decrease in turnover ratio during 2020-2021 likely represent a cautious approach under possibly challenging conditions. The subsequent improvements from 2022 to 2024 indicate a move towards optimized payable processing, enhancing operational efficiency. The slight reversal in 2025 could warrant further investigation to understand underlying causes.

Average Inventory Processing Period

The average inventory processing period shows a steadily increasing trend over the six-year span. It began at 98 days in early 2020 and remained stable through early 2021, then gradually increased year over year to reach 114 days by early 2025. This suggests a lengthening of the time required to process inventory, potentially indicating slower inventory turnover or increased stock levels.

Average Payables Payment Period

The average payables payment period fluctuates over the period observed. It started at 57 days in early 2020, increased to 66 days by early 2021, and slightly decreased to 65 days in early 2022. Subsequently, it declined more significantly to 55 days in early 2024 before rising again to 61 days in early 2025. These variations indicate changes in payment policies or supplier payment negotiations, reflecting a flexible approach to managing payables.

Data Gaps and Missing Information

The average receivable collection period and cash conversion cycle data are not provided for any of the periods, limiting the ability to analyze overall working capital efficiency comprehensively.