Adient PLC (ADNT)

Short-term

Turnover ratios

Activity ratios provide insight into how efficiently a company is managing its resources and operations. Let's analyze the activity ratios of Adient plc based on the provided data:

1. Inventory turnover:
- The inventory turnover ratio shows how many times a company's inventory is sold and replaced over a period.
- Adient plc's inventory turnover has been consistently increasing from Q2 2022 to Q1 2024.
- The higher inventory turnover indicates that Adient is selling its inventory more rapidly, which is a positive sign of efficient inventory management.

2. Receivables turnover:
- Receivables turnover ratio indicates how efficiently a company is collecting its accounts receivable.
- Adient's receivables turnover fluctuates across the quarters, with a peak in Q1 2023 and a slight decline in subsequent quarters.
- A higher receivables turnover ratio implies quicker collection of receivables, potentially improving cash flow and liquidity.

3. Payables turnover:
- Payables turnover ratio measures how efficiently a company is managing its accounts payable.
- Adient's payables turnover ratio has shown a fluctuating trend over the quarters.
- A higher payables turnover ratio may indicate that the company is paying its suppliers faster, potentially impacting its relationships and cash flow management.

4. Working capital turnover:
- The working capital turnover ratio shows how efficiently a company is using its working capital to generate sales revenue.
- Adient's working capital turnover has been on an upward trend, indicating improved efficiency in converting working capital into sales.
- A higher working capital turnover ratio suggests effective management of working capital resources.

Overall, based on the activity ratios, Adient plc has shown improvements in inventory turnover and working capital turnover, signaling efficient management of inventories and working capital. Receivables turnover has been relatively stable, while payables turnover shows some fluctuations that may require closer monitoring for potential impacts on cash flow and supplier relationships.

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Average number of days

In analyzing the activity ratios of Adient plc over the past eight quarters, several trends can be observed:

1. Days of Inventory on Hand (DOH): The DOH has shown a decreasing trend over the quarters, indicating that Adient is managing its inventory more efficiently. The company has been able to reduce the number of days it takes to turn its inventory into sales, which can potentially lead to lower holding costs and better cash flow.

2. Days of Sales Outstanding (DSO): The DSO has fluctuated over the quarters but generally shows a slight improvement. A lower DSO means that Adient is collecting its accounts receivable more quickly, which could be a sign of effective credit policies and timely collections from customers.

3. Number of Days of Payables: The number of days of payables has varied over the quarters, showing a mixed trend. A higher number of days of payables suggests that Adient is taking longer to pay its creditors, which can help improve cash flow but may strain relationships with suppliers if not managed effectively.

Overall, the trend in these activity ratios for Adient plc indicates that the company has been focusing on improving its efficiency in managing inventory, accounts receivable, and accounts payable. By optimizing these aspects of its operations, Adient may be able to enhance its working capital management and overall financial performance.

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Long-term

Adient plc's fixed asset turnover has been relatively stable over the past few quarters, ranging between 8.54 and 11.14. This indicates that the company efficiently utilizes its fixed assets to generate sales. The consistent high values suggest that Adient is effectively generating revenue from its investment in fixed assets.

In terms of total asset turnover, there has been a gradual increase from 1.32 to 1.65 over the quarters analyzed. This indicates that Adient is generating more revenue relative to its total assets. The increasing trend implies that the company is becoming more efficient in generating sales from its total asset base.

Overall, both the fixed asset turnover and total asset turnover ratios demonstrate that Adient plc is effectively utilizing its assets to generate revenue, with a slight improvement in total asset turnover efficiency over the analyzed periods. This efficiency could positively impact the company's profitability and overall financial performance.