AGCO Corporation (AGCO)

Short-term

Turnover ratios

AGCO Corporation's activity ratios show trends in how efficiently the company manages its inventory, receivables, payables, and working capital.

1. Inventory Turnover: The inventory turnover ratio has decreased from 4.15 in 2020 to 3.94 in 2024. This indicates that the company is selling its inventory at a slower rate over the years, which may suggest either excessive inventory on hand or a decrease in demand for its products.

2. Receivables Turnover: The receivables turnover ratio has shown a decline from 21.36 in 2020 to 8.73 in 2024. This suggests that AGCO Corporation is taking longer to collect payments from its customers, which could be a sign of potential issues with its credit policies or the creditworthiness of its customers.

3. Payables Turnover: The payables turnover ratio has fluctuated, initially decreasing from 9.59 in 2020 to 7.90 in 2022, and then increasing to 13.25 in 2024. This indicates changes in how quickly the company is paying its suppliers, with a significant increase in payables turnover by 2024, which could imply improved liquidity or payment terms negotiation.

4. Working Capital Turnover: The working capital turnover ratio has shown a decline from 18.18 in 2020 to 8.43 in 2024. This reveals a decrease in the efficiency of utilizing working capital to generate sales, possibly indicating inefficiencies in managing the company's current assets and liabilities.

Overall, these activity ratios highlight the changing dynamics in AGCO Corporation's operational efficiency and provide insights into areas that may require further attention to enhance the company's overall financial performance.

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Average number of days

AGCO Corporation's activity ratios provide insights into how efficiently the company manages its assets and liabilities.

1. Days of Inventory on Hand (DOH):
- The trend in AGCO Corporation's DOH shows an increase over the years, indicating that inventory is being held for a longer period. This may suggest slower inventory turnover, tying up more capital in inventory. The increase from 87.92 days in 2020 to 106.43 days in 2022 is noteworthy and may warrant further investigation.

2. Days of Sales Outstanding (DSO):
- AGCO Corporation's DSO shows some fluctuations over the years. A lower DSO indicates that the company is collecting its receivables faster, which is generally preferable. However, the significant increase from 17.63 days in 2022 to 41.82 days in 2024 could signal potential challenges in collecting sales revenue efficiently.

3. Number of Days of Payables:
- The trend in AGCO Corporation's days of payables suggests some variability but generally decreasing over the years. A lower number of days of payables may indicate that the company is paying its creditors more quickly. While this can improve relationships with suppliers, it may also indicate a need for closer management of cash flow.

Overall, while the company's activity ratios provide some insights into its operational efficiency, further analysis and comparison with industry benchmarks would be necessary to fully evaluate AGCO Corporation's performance in managing its working capital and operating cycle.

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Long-term

AGCO Corporation's long-term activity ratios show fluctuations over the analyzed period. The Fixed Asset Turnover ratio, which measures the efficiency of generating sales from fixed assets, increased from 12.12 in 2020 to 15.89 in 2022, indicating an improvement in asset utilization. However, this ratio decreased significantly to 6.10 by the end of 2024, suggesting a potential decline in the company's ability to generate sales from its fixed assets efficiently.

Similarly, the Total Asset Turnover ratio, reflecting the efficiency of generating sales from all assets, increased from 2.15 in 2020 to 2.50 in 2022, indicating improved overall asset utilization. However, this ratio declined to 0.99 by the end of 2024, signaling a decrease in the company's ability to generate sales relative to its total assets.

Overall, the analysis of AGCO Corporation's long-term activity ratios suggests variations in asset utilization efficiency over the period, with a mixed trend in optimizing the generation of sales from both fixed and total assets.