Arcosa Inc (ACA)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.64 | 5.80 | 5.15 | 5.61 | 4.96 |
| Receivables turnover | 6.46 | 6.71 | 6.55 | 7.44 | 8.68 |
| Payables turnover | 6.84 | 9.61 | 9.04 | 10.78 | 15.61 |
| Working capital turnover | 4.80 | 4.59 | 5.04 | 5.46 | 3.67 |
Arcosa Inc's activity ratios provide insights into how efficiently the company is managing its assets and liabilities to generate sales.
1. Inventory Turnover: Arcosa's inventory turnover has been relatively stable over the years, ranging from 4.64 to 5.76. This indicates that the company is efficient in selling its inventory and replenishing it. A higher turnover ratio means that inventory is selling more quickly, which can be beneficial in reducing storage and carrying costs.
2. Receivables Turnover: The receivables turnover ratio has gradually decreased from 8.68 in 2019 to 6.46 in 2023. This suggests that Arcosa is taking longer to collect payments from its customers. A lower turnover ratio may indicate potential issues with credit policies, collection efforts, or the quality of receivables.
3. Payables Turnover: Arcosa's payables turnover has also decreased over the years, from 15.61 in 2019 to 6.84 in 2023. A lower payables turnover ratio could imply that the company is taking longer to pay its suppliers, which may lead to strained supplier relationships or missed opportunities for early payment discounts.
4. Working Capital Turnover: The working capital turnover ratio measures how efficiently a company is using its working capital to generate sales. Arcosa's ratio has fluctuated but generally remained in the range of 3.67 to 5.46. A higher turnover ratio indicates that the company is effectively utilizing its working capital to support its operations and sales activities.
Overall, Arcosa Inc's activity ratios show mixed results, with some ratios indicating efficient asset management (inventory turnover) while others suggest room for improvement in managing receivables, payables, and working capital. It is essential for the company to monitor these ratios closely and make strategic adjustments to optimize its operational efficiency and financial performance.
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 | 78.67 | 62.93 | 70.92 | 65.03 | 73.62 |
| Days of sales outstanding (DSO) | days | 56.48 | 54.39 | 55.71 | 49.07 | 42.03 |
| Number of days of payables | days | 53.36 | 38.00 | 40.36 | 33.85 | 23.39 |
Activity ratios provide insights into how efficiently a company is managing its assets and operating cycle. Let's analyze Arcosa Inc's activity ratios based on the provided data:
1. Days of Inventory on Hand (DOH):
- Arcosa Inc's DOH has shown an increasing trend over the past five years, indicating that the company is holding inventory for a longer period before selling it.
- The increase in DOH implies that Arcosa Inc may be facing challenges in managing its inventory efficiently, possibly leading to higher carrying costs and the risk of obsolescence.
2. Days of Sales Outstanding (DSO):
- Arcosa Inc's DSO has also been on the rise over the period, suggesting that the company is taking longer to collect receivables from its customers.
- An increasing DSO may point towards potential issues with credit policies, customer payment trends, or the company's collection processes.
3. Number of Days of Payables:
- The number of days of payables demonstrates the number of days it takes for Arcosa Inc to pay its suppliers.
- The trend shows that Arcosa Inc has been taking longer to pay its suppliers over the years, indicating that the company may be managing its payables more effectively to optimize cash flow.
Overall, the analysis reveals that Arcosa Inc may be facing challenges in efficiently managing its inventory and collecting receivables, as indicated by the increasing DOH and DSO ratios. However, the lengthening payables period suggests the company is strategically managing its payment obligations. Monitoring and potentially improving these activity ratios can help Arcosa Inc enhance its operating efficiency and cash flow management.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 1.73 | 1.87 | 1.69 | 2.12 | 2.13 |
| Total asset turnover | 0.65 | 0.67 | 0.64 | 0.73 | 0.75 |
The fixed asset turnover ratio for Arcosa Inc has shown a declining trend from 2019 to 2023, signifying that the company's ability to generate sales from its fixed assets has slightly weakened over the years. However, it remained relatively stable around 1.7 over the last few years.
On the other hand, the total asset turnover ratio also witnessed a decrease over the same period, indicating that the company's efficiency in utilizing all its assets to generate revenue has somewhat decreased. The ratio ranged from 0.64 to 0.75, highlighting a decrease in the efficiency of total asset utilization.
Overall, both ratios suggest that Arcosa Inc may need to focus on improving its asset management efficiency to enhance its long-term profitability and productivity levels.