Wednesday, April 6, 2022

Analysts can use Calcbench to research numerous profitability, liquidity, and solvency ratios, for individual firms or to compare ratios across groups.

So there we were the other day, skimming the Wall Street Journal, when we came across an interesting article about Kontoor Brands ($KTB) the maker of Lee and Wrangler jeans spun off from VF Corp. ($VFC) two years ago.

The article interviewed Kontoor’s CFO, Rustin Welton, who talked about how the firm has been reducing net debt in the last several years by focusing on its cash conversion cycle. That cycle tracks how quickly a company turns over inventory and collects payments; the more quickly your cash conversion cycle runs, the more quickly you generate free cash that can be used for tasks such as paying down debt.

In Kontoor’s case, focusing on the cash cycle has allowed the company to cut net debt from $922 million when it spun off from VF in 2019 to $606 million at the end of 2021.

So what does any of that have to do with Calcbench? We have such data! The cash cycle is one of many performance ratios we track and calculate as a matter of course for all publicly traded firms.

To find those ratios in Calcbench, one place to start is our Bulk Data Query Page. Scroll to the bottom of the page and you’ll see the many ratios we track. Figure 1, below, tells the tale. (The formal name we use for the cash cycle ratio is “Cash to Cash Cycle,” but it’s substantively the same thing.)

First, select whatever firm or group of firms you want to analyze at the top of the Bulk Data Query Page, along with whatever period of time you’re researching. (You can get data for one specific period or a range across multiple years.) Then scroll to the bottom, select the ratios you want to analyze, and press “Export to Excel.” You’ll get all the data in one nifty spreadsheet.

Alternatively, you can also use the Multi-Company Page. Again, start by selecting one or more firms that you want to study. Then enter “cash to cash cycle” in the standardized metrics text field on the left side of your screen, and the results will emerge. Figure 2, below, is an example. We included Kontoors, VF Corp., and Under Armor ($UA) to give a sense of how Kontoors compares to a few peers, and tracked the data back to 2018.

You can research any of the other ratios listed in Figure 1, the Bulk Query Page, in the same way; they are all standardized metrics one can find on the Multi-Company page too.

That concludes today’s tour of performance ratios. Pick the one that matters to you, fire up the database, and enjoy!


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