AGCO Corporation (AGCO)

Short-term

Turnover ratios

AGCO Corporation's Inventory Turnover has shown fluctuations over the years, ranging from a low of 2.54 in June 2020 to a high of 4.15 in December 2020, indicating varying efficiencies in managing its inventory levels. The trend seems to have stabilized around the 3 to 4 range in recent periods, with the latest figure being 3.94 as of December 31, 2024.

In terms of Receivables Turnover, the company's ability to collect receivables has also experienced fluctuations. The turnover ratio ranged from a high of 22.46 in December 2021 to a low of 8.69 in September 2024. This may indicate changes in the company's credit policies or the overall creditworthiness of its customers.

With regards to Payables Turnover, AGCO Corporation appears to have a consistent trend of paying its suppliers, with the ratio hovering between 6.94 and 13.25 over the years. The company seems to be managing its payables effectively while maintaining good relationships with its suppliers.

Analyzing the Working Capital Turnover, the company's efficiency in utilizing its working capital has shown varying performance levels. The turnover ratio ranged from a high of 21.71 in March 2021 to a low of 3.37 in March 2024. This indicates fluctuations in how efficiently the company is using its resources to generate revenue.

Overall, AGCO Corporation's activity ratios reflect varying levels of efficiency in managing its inventory, receivables, payables, and working capital over the years. Monitoring these ratios can provide insights into the company's operational performance and financial management strategies.

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Average number of days

AGCO Corporation's activity ratios provide insights into the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH):
- Inventory turnover is crucial for managing working capital efficiently. AGCO's DOH has shown fluctuations over the years, ranging from a high of 143.97 days in June 2020 to a low of 92.54 days in December 2024. The decreasing trend from 2020 to 2024 indicates improved inventory management, ensuring that the company is not holding excess inventory for extended periods. However, the increase in DOH towards the end of 2024 warrants monitoring to prevent a buildup of excess inventory.

2. Days of Sales Outstanding (DSO):
- DSO measures how long it takes for AGCO to collect its accounts receivable. The DSO trend fluctuates significantly, with a peak of 42.02 days in September 2024. The decreasing trend from 2020 to 2022 suggests effective credit control and efficient collection processes. However, the significant increase in DSO in late 2023 and 2024 may raise concerns about potential difficulties in collecting receivables promptly, impacting cash flows and liquidity.

3. Number of Days of Payables:
- Payables turnover represents the number of days it takes AGCO to pay its suppliers. The data shows a decreasing trend in the number of days of payables from 2020 to 2024, indicating that the company is settling its payables more quickly. This can help AGCO maintain good relationships with suppliers and potentially benefit from early payment discounts. However, a rapid decrease in payables days, as seen in the latter half of 2024, may indicate financial strain or challenges in managing working capital effectively.

Overall, while AGCO Corporation has demonstrated improvements in managing inventory and payables, the increasing DSO in late 2023 and 2024 raises concerns about the company's collection efficiency. Monitoring these activity ratios and implementing strategies to address any inefficiencies can help AGCO optimize its working capital management and enhance overall operational efficiency.

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Long-term

AGCO Corporation's fixed asset turnover ratio has shown a fluctuating trend over the years, starting at 9.57 in March 2020 and peaking at 16.77 in September 2022. However, the ratio has since declined to 6.10 by December 2024. This indicates how efficiently the company is utilizing its fixed assets to generate sales revenue. A higher fixed asset turnover ratio is generally favorable as it suggests better asset utilization.

On the other hand, AGCO Corporation's total asset turnover ratio has also displayed variability during the period under review. The ratio started at 1.68 in March 2020, reached its peak at 2.50 in December 2022, and then declined to 0.99 by December 2024. The total asset turnover ratio reflects the company's ability to generate sales relative to the size of its asset base. A higher total asset turnover ratio is typically preferred as it indicates that the company is efficient in generating sales revenue from its total assets.

In analyzing these long-term activity ratios, it is important to consider both the fixed asset turnover and total asset turnover to gain a comprehensive understanding of AGCO Corporation's efficiency in utilizing its assets to generate revenue.