AAON Inc (AAON)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.55 | 3.92 | 3.64 | 5.24 | 5.57 |
| Receivables turnover | 8.43 | 7.01 | 7.03 | 10.09 | 6.88 |
| Payables turnover | 35.34 | 17.14 | 16.34 | 34.63 | 34.83 |
| Working capital turnover | 4.12 | 4.38 | 4.10 | 3.25 | 3.57 |
1. Inventory Turnover:
- AAON Inc.'s inventory turnover shows a consistent declining trend from 2019 to 2021 before a slight increase in 2022 and a significant jump in 2023.
- The increase in 2023 indicates that the company is selling its inventory at a faster rate compared to previous years, which could be a positive sign of efficient inventory management.
2. Receivables Turnover:
- The receivables turnover ratio has fluctuated over the years, with variations in performance.
- In 2023, there was a notable increase in the receivables turnover ratio, indicating that the company collected its receivables more efficiently compared to the previous year.
3. Payables Turnover:
- The payables turnover ratio indicates how quickly a company pays off its suppliers. AAON Inc.'s payables turnover ratio has shown fluctuations over the years.
- A higher ratio in 2023 compared to the previous year implies that the company is taking longer to pay its suppliers, which could impact relationships with vendors.
4. Working Capital Turnover:
- AAON Inc.'s working capital turnover has also shown some fluctuations over the years.
- The ratio indicates how efficiently the company is utilizing its working capital to generate sales. The decreasing trend from 2019 to 2021 suggests a potential inefficiency in utilizing working capital, though there was a slight increase in 2022 and 2023.
Overall, the analysis of AAON Inc.'s activity ratios suggests mixed performance in managing its inventory, receivables, payables, and working capital. The company has shown improvements in some areas, such as faster inventory turnover in 2023 and efficient collection of receivables, but there are also areas, like payables turnover and working capital efficiency, that may require further attention for optimization.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 80.24 | 93.10 | 100.29 | 69.63 | 65.58 |
| Days of sales outstanding (DSO) | days | 43.32 | 52.04 | 51.89 | 36.18 | 53.07 |
| Number of days of payables | days | 10.33 | 21.30 | 22.34 | 10.54 | 10.48 |
Activity ratios provide insights into how effectively a company manages its assets and liabilities to generate sales. Let's analyze AAON Inc.'s activity ratios over the past five years:
1. Days of Inventory on Hand (DOH): This ratio measures how long, on average, it takes for AAON Inc. to sell its inventory. The decreasing trend in DOH from 2019 to 2021 indicates that the company has been managing its inventory more efficiently, but there was a slight uptick in 2022 and 2023. This could signal a potential buildup of inventory or slower sales.
2. Days of Sales Outstanding (DSO): DSO reflects the average number of days it takes AAON Inc. to collect revenue after making a sale. The fluctuating trend in DSO over the years indicates variability in the company's collection period. The decrease in DSO in 2020 followed by a significant increase in 2021 and then further decreases in 2022 and 2023 suggests changes in the company's credit policies or effectiveness in collecting receivables.
3. Number of Days of Payables: This ratio measures how quickly AAON Inc. pays its suppliers. The decrease in the number of days of payables from 2019 to 2021 followed by a slight increase in 2022 and another decrease in 2023 indicates that the company has been paying its suppliers more quickly over the years. This may have implications for cash flow management and relationships with suppliers.
Overall, while there are some fluctuations in AAON Inc.'s activity ratios, it is essential for the company to maintain a balance between managing inventory effectively, collecting receivables efficiently, and honoring payables within a reasonable timeframe to optimize its cash conversion cycle and overall operational performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.15 | 2.93 | 2.09 | 2.35 | 2.63 |
| Total asset turnover | 1.24 | 1.10 | 0.83 | 1.17 | 1.26 |
The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate sales. A higher ratio indicates that the company is generating more sales per dollar of fixed assets. The trend of AAON Inc.'s fixed asset turnover ratio has been generally increasing over the past five years, from 2.64 in 2019 to 3.16 in 2023. This indicates that the company has been able to improve its efficiency in utilizing its fixed assets to generate sales.
On the other hand, the total asset turnover ratio measures how efficiently a company is utilizing all its assets to generate sales. A higher total asset turnover ratio suggests that the company is generating more sales per dollar of total assets. In the case of AAON Inc., the total asset turnover ratio has varied over the years, with a peak of 1.26 in 2019, a dip to 0.82 in 2021, and a recovery to 1.24 in 2023. This fluctuation may indicate changes in the company's asset base or sales generation strategies.
Overall, the improving trend in the fixed asset turnover ratio suggests that AAON Inc. has been more efficient in using its fixed assets to generate revenue. However, the fluctuation in the total asset turnover ratio may warrant further investigation into the company's overall asset management and sales generation strategies.