TJX Cos. Inc. (NYSE:TJX)

The analysis of financial metrics over the given periods reveals various trends associated with operational efficiency and working capital management.

Inventory Turnover

The inventory turnover ratio exhibits moderate fluctuations, starting from 6.13 in 2020, decreasing to a low of 5.66 in 2021, then showing a recovery trend peaking at 6.36 in 2024 before slightly declining to 6.09 in 2025. This pattern suggests variations in inventory management efficiency with temporary slowdowns followed by improvements.

Receivables Turnover

The receivables turnover ratio shows notable volatility, plunging sharply from 108 in 2020 to 69.69 in 2021, recovering significantly over the next years to surpass 102 in 2024 and 2025. This indicates initial challenges in collecting receivables promptly, followed by improvement in accounts receivable collection efficiency in later periods.

Payables Turnover

The payables turnover decreased substantially from 11.17 in 2020 to 5.09 in 2021, then gradually recovered to around 9.19 in 2025. This suggests an extension in the average period taken to pay suppliers in 2021, with a gradual return towards faster payment terms in subsequent years, although not to the initial levels.

Working Capital Turnover

The working capital turnover ratio faced a sharp decline from 23.97 in 2020 down to 6.51 in 2021, which indicates reduced efficiency in utilizing working capital during this phase. However, a steady improvement followed, reaching 28.42 by 2025, reflecting enhanced operational efficiency and better utilization of working capital resources.

Average Inventory Processing Period

The inventory processing period increased from 60 days in 2020 to 65 days in 2021, then progressively declined to 57 days by 2024, before a slight increase to 60 days in 2025. This trend aligns with the inventory turnover data, indicating initial inventory holding period lengthening, followed by improved inventory management reducing holding time.

Average Receivable Collection Period

The average receivable collection period increased from 3 days in 2020 to 5 days in 2021, then stabilized at 4 days from 2022 through 2025. This suggests a temporary extension in receivable collection time in 2021, with consistent performance thereafter. Collection remains rapid throughout the periods analyzed.

Operating Cycle

The operating cycle lengthened from 63 days in 2020 to 70 days in 2021, then gradually shortened to 61 days in 2024, followed by a slight increase to 64 days in 2025. This pattern reflects initial extensions in the total time required to convert inventory and receivables into cash, with subsequent efficiency gains.

Average Payables Payment Period

The average payables payment period experienced a marked increase from 33 days in 2020 to 72 days in 2021, then a reduction to 37 days in 2024, and a minor rise to 40 days in 2025. This indicates that the company extended its payment terms significantly in 2021, possibly as a liquidity management strategy, then reverted towards faster payments.

Cash Conversion Cycle

The cash conversion cycle shows significant variation, starting at 30 days in 2020, moving to a negative value (-2 days) in 2021, indicating that payables were paid slower than the combined length of inventory and receivable periods. It then rose to 20-25 days from 2022 to 2024, stabilizing at 24 days in 2025. The negative and low values reflect strong working capital efficiency through effective supplier payment terms and quick turnover cycles.

Overall, the data reveals that while the company faced operational challenges in 2021, as evidenced by deteriorations in several turnover and period metrics, it has implemented measures leading to gradual improvements in efficiency and working capital management by 2024 and 2025. Key indicators such as working capital turnover and cash conversion cycle show enhanced performance over time, indicating a stronger operational and liquidity position in recent years.

Cost of Sales, Including Buying and Occupancy Costs

There is a general upward trend in the cost of sales over the analyzed periods. After an initial decrease to 24,534 million USD in the year ending January 30, 2021, the amount rises steadily each subsequent year, culminating at 39,112 million USD by February 1, 2025. This indicates increasing expenses related to purchasing and occupancy, possibly reflecting expansion or inflationary pressures.

Merchandise Inventories

Merchandise inventories show some volatility but ultimately increase over the observed timeframe. Starting at 4,873 million USD, inventories decline to 4,337 million USD in early 2021 before rising significantly to 6,421 million USD by early 2025. This pattern suggests an initial drawdown followed by accumulation of stock, which may align with growth strategies or anticipated sales increases.

Inventory Turnover Ratio

The inventory turnover ratio fluctuates slightly but remains relatively stable over the period. It decreases from 6.13 in early 2020 to a low of 5.66 in 2021, then rises again to peak at 6.36 in 2024 before settling at 6.09 in 2025. These values indicate consistent efficiency in inventory management, with the company maintaining the ability to sell and replace stock approximately six times per year throughout the period.

Net Sales

The net sales figures demonstrate notable fluctuation over the reported periods. Starting at 41,717 million USD in 2020, net sales declined significantly to 32,137 million USD in 2021, a decrease likely influenced by specific external conditions during that year. Subsequently, the company experienced a strong recovery, with net sales rising to 48,550 million USD in 2022 and continuing upward through 2023 to 49,936 million USD. This upward trend maintained momentum with sales reaching 54,217 million USD in 2024 and 56,360 million USD in 2025, indicating sustained growth and improvement in revenue generation capabilities.

Accounts Receivable, Net

The accounts receivable balance showed a consistent increasing trend from 386 million USD in 2020 to a peak of 563 million USD in 2023. After this peak, there was a slight decrease to 529 million USD in 2024, followed by a small rebound to 549 million USD in 2025. This pattern suggests a growing extension of credit to customers over the years, with some stabilization or cautious credit management observed in the last two years.

Receivables Turnover Ratio

The receivables turnover ratio presents a mixed pattern over the observed periods. It started at a high of 108 in 2020, indicating rapid collection of receivables. However, there was a sharp decline to 69.69 in 2021, reflecting slower collection efficiency during that year. The ratio improved substantially in 2022 to 93.79 and remained relatively stable in 2023 at 88.7. The company further enhanced collection efficiency in 2024 and 2025, with the ratio rising above 102. This improvement in receivables turnover after 2021 suggests enhanced credit and collection policies, leading to better liquidity management over time.

Cost of Sales, Including Buying and Occupancy Costs

The cost of sales demonstrates an overall increasing trend over the period analyzed. Starting at 29,846 million US dollars on February 1, 2020, there is a notable dip in the subsequent year to 24,534 million US dollars. However, from that point onward, the cost of sales rises steadily to 34,714 million US dollars in January 29, 2022, continuing up to 39,112 million US dollars by February 1, 2025. This indicates growth in sales volume, costs, or a combination of both after a temporary contraction in 2021.

Accounts Payable

Accounts payable figures exhibit a volatile pattern. Initially, there is a sharp increase from 2,673 million US dollars in February 2020 to 4,823 million US dollars by January 30, 2021. This is followed by a decline in subsequent years to 3,794 million in January 28, 2023. The amount recovers slightly thereafter, reaching 4,257 million US dollars by February 1, 2025. The fluctuations suggest varying purchasing or payment strategies over the years, possibly reflecting changes in supplier terms or cash management approaches.

Payables Turnover Ratio

The payables turnover ratio displays considerable variation, starting relatively high at 11.17 in early 2020, dropping sharply to 5.09 in 2021, then improving to 7.77 in 2022, and progressively increasing to peak at 9.83 in 2024 before slightly declining to 9.19 in 2025. The initial drop signifies slower payment cycles or extended credit terms in 2021, whereas the subsequent recovery indicates a trend towards faster turnover or stricter payment discipline. Despite the recent minor decrease, the ratio remains high relative to 2021 levels, indicating more efficient use of payables in recent years.

Summary Insights

The overall data suggest that despite an initial dip in costs and turnover efficiency around 2021, the company has managed to recover and sustain growth in cost of sales accompanied by improved payables management. The fluctuations in accounts payable and payables turnover point to adaptive financial and operational policies responding to external or internal shifts. The trends align with a business adapting payment cycles and cost structures amidst changing market or economic conditions over the five-year period.

Working Capital

The working capital shows a steep increase from 1,740 million US dollars in the 2020 period to a peak of 4,936 million in 2021. However, after this peak, there is a continuous decline over the subsequent years, reaching 1,983 million in 2025. This indicates a substantial reduction in net current assets after 2021, suggesting either increased current liabilities or decreased current assets over the recent periods.

Net Sales

Net sales experienced a significant drop from 41,717 million US dollars in 2020 to 32,137 million in 2021, likely reflecting external challenges during that interval. Thereafter, net sales display a consistent upward trend each year, rising steadily to 56,360 million by 2025. This trend signifies recovery and growth in sales performance following the initial downturn.

Working Capital Turnover

The working capital turnover ratio declined sharply from 23.97 in 2020 to 6.51 in 2021, correlating with the previous year's large increase in working capital and decreased sales. From 2021 onward, this ratio improved consistently each year, reaching 28.42 by 2025. The rising turnover ratio indicates increasing efficiency in using working capital to generate sales over the later years.

Overall Analysis

The financial data reflects an initial period of stress or adjustment from 2020 to 2021, characterized by a rise in working capital and decline in net sales and turnover efficiency. Subsequently, the firm demonstrates a recovery phase, with net sales and working capital turnover improving steadily from 2022 to 2025. Meanwhile, working capital reduces, potentially indicating better management of current assets and liabilities amid growing sales. The trends suggest enhanced operational efficiency and sales growth after the initial disruption.

The analysis of the annual data reveals several key trends in inventory management efficiency over the examined periods.

Inventory Turnover Ratio

The inventory turnover ratio exhibits some fluctuation but generally maintains a stable range over the years. Starting at 6.13 in early 2020, it slightly declined to 5.66 in early 2021, followed by a modest recovery to 5.82 in early 2022. Subsequent periods show improvement, reaching a peak of 6.36 in early 2024 before declining again to 6.09 in early 2025. The overall trend suggests a resilient inventory turnover with slight volatility but no significant long-term deterioration or improvement.

Average Inventory Processing Period

The average inventory processing period, expressed in number of days, shows an inverse relationship with the inventory turnover ratio, as expected. Beginning at 60 days in early 2020, it increased to 65 days by early 2021, indicating a temporary slowdown in inventory movement. Following that increase, the period gradually shortened to a low of 57 days in early 2024, reflecting heightened efficiency in inventory processing. However, it rose slightly to 60 days by early 2025. These movements correspond closely with the turnover ratios, with shorter processing periods aligning with higher turnover ratios.

In summary, the data indicates that the company experienced some fluctuations in inventory management efficiency over the years, with phases of both slower and expedited inventory processing. The patterns suggest careful management of inventory levels that maintained overall stability without significant long-term disruptions or improvements in turnover rates or processing times.

Receivables Turnover

The receivables turnover ratio experienced notable fluctuations between 2020 and 2025. It started at a high level of 108 in February 2020, followed by a significant decline to 69.69 in January 2021. Subsequently, the ratio recovered and improved steadily over the subsequent years, reaching 93.79 in January 2022, then modestly declining to 88.7 in January 2023. In the final two years reported, February 2024 and February 2025, the ratio showed a consistent upward trend, stabilizing around 102.5. This pattern suggests an initial challenge in collections or credit management around 2021, followed by a recovery and strengthening of turnover efficiency, approaching pre-2021 levels by 2024 and 2025.

Average Receivable Collection Period

The average receivable collection period shows a generally stable pattern over the years analyzed. The number of days increased from 3 days in February 2020 to 5 days in January 2021, indicating a slight delay in collection during that period. Thereafter, the collection period shortened back to 4 days from January 2022 onward and remained consistent through to February 2025. This stability reflects effective management in the collection process, maintaining a short and steady collection period after the temporary lengthening observed in early 2021.

Overall Insights

The data reveals that although there was a temporary deterioration in the receivables turnover and collection efficiency around the year 2021, corrective efforts or changes in operational conditions led to improved performance in subsequent years. The stabilization of the collection period at around 4 days alongside a recovering turnover ratio suggests enhanced effectiveness in receivables management, contributing positively to liquidity and operational cash flow in the later years.

Average Inventory Processing Period

The average inventory processing period exhibits some fluctuation over the observed years. Starting at 60 days in early 2020, it increased to a peak of 65 days by early 2021, followed by a gradual decline to 57 days by early 2024. The period then rose slightly to 60 days in early 2025. This indicates a general trend toward improved inventory turnover after 2021, with a moderate increase again in the most recent year.

Average Receivable Collection Period

The average receivable collection period remains relatively stable across the years, fluctuating minimally between 3 and 5 days. It increased from 3 days in early 2020 to 5 days in early 2021, then stabilized at around 4 days from 2022 to 2025. This implies consistent efficiency in collecting receivables throughout the period.

Operating Cycle

The operating cycle mirrors the trends in inventory processing and receivable collection periods. It rose from 63 days in early 2020 to a peak of 70 days in early 2021, then steadily decreased to 61 days by early 2024, before slightly increasing to 64 days in early 2025. Overall, the cycle shows a temporary extension in 2021 but a general improvement with quicker turnover in subsequent years, with a minor setback in the most recent year.

The data reveals variations in the payables turnover ratio and the average payables payment period over a six-year span. These metrics offer insights into the company's efficiency in managing its accounts payable.

Payables Turnover Ratio

The payables turnover ratio exhibits significant fluctuations. It started at a high of 11.17 in early 2020, then sharply declined to 5.09 in 2021. Following this drop, the ratio gradually improved, reaching 7.77 in 2022 and further increasing to 9.53 in 2023. In the subsequent two years, the ratio plateaued somewhat, with values of 9.83 in 2024 and a slight decrease to 9.19 in 2025. This trend suggests an initial slowdown in the rate at which the company was paying its suppliers, followed by a recovery towards a higher turnover, indicating improved payment efficiency after 2021.

Average Payables Payment Period (Number of Days)

The average payment period in days inversely correlates with the turnover ratio and demonstrates a mirror-image pattern. It began at 33 days in 2020, increased substantially to 72 days in 2021, indicating a delay in payments. Subsequently, the period shortened to 47 days in 2022 and further declined to 38 days in 2023, reflecting a trend toward faster payments. In the last two years, the average payment period stabilized around 37 to 40 days, showing consistency in payment timing but still notably longer than the initial 33 days recorded in 2020.

Overall, the data indicates that the company initially extended its payment terms considerably in 2021, as evidenced by the fall in payables turnover and the rise in payment period days. After this period, it reverted to a faster payments cycle, enhancing its operational efficiency in supplier settlements. However, the payment period has not returned to its earliest levels, implying a possible strategic decision to maintain longer payment terms relative to the starting point in 2020.

Average Inventory Processing Period

The average inventory processing period displayed a fluctuating trend over the observed years. It started at 60 days in early 2020, increased to a peak of 65 days in early 2021, and then gradually decreased to 57 days by early 2024 before rising slightly to 60 days in early 2025. This indicates some variability in inventory management efficiency, with a general tendency towards shorter processing times in the middle years before stabilizing.

Average Receivable Collection Period

The average receivable collection period remained relatively stable, ranging from 3 to 5 days throughout the period. A slight increase from 3 days in 2020 to 5 days in 2021 was observed, followed by a consistent 4-day period from 2022 through 2025. This suggests steady and efficient collection practices with minimal fluctuation.

Average Payables Payment Period

The average payables payment period exhibited significant variability. Beginning at 33 days in early 2020, it sharply increased to 72 days in 2021, indicating a delay in payments to suppliers. Subsequently, it decreased to 47 days in 2022 and further declined to a range between 37 and 40 days from 2023 onward. This pattern suggests an initial extension of payment terms or delay, followed by improved payment timeliness in later years.

Cash Conversion Cycle

The cash conversion cycle, which reflects the time span between cash outlay and cash recovery, showed notable fluctuations. It started at 30 days in early 2020, turned negative (-2 days) in 2021, indicating a quicker recovery of cash relative to outflows during that year. Afterwards, it rose to 20 days in 2022 and remained relatively stable around the mid-20s through 2025. This trend points to a brief improvement in working capital efficiency in 2021, with the cycle lengthening again but stabilizing subsequently.