AAR Corp (AIR)

Short-term

Turnover ratios

AAR Corp's inventory turnover has improved significantly over the past five years, from 0.38 in 2020 to 3.00 in 2024. This indicates that the company is now selling its inventory more efficiently, which is a positive sign for its operations.

On the other hand, the receivables turnover has decreased gradually from 12.00 in 2020 to 7.91 in 2024. This suggests that the company is taking longer to collect payments from its customers, which may impact its cash flow and liquidity.

The payables turnover has also seen an improvement over the years, increasing from 1.23 in 2020 to 9.23 in 2024. This indicates that the company is managing its payments to suppliers more effectively, which could positively impact its working capital management.

The working capital turnover has shown a generally stable trend over the years, ranging from 1.95 in 2020 to 2.46 in 2024. This indicates that the company is effectively utilizing its working capital to generate sales revenue.

Overall, AAR Corp's activity ratios reflect improvements in inventory management and payables turnover, but a slight deterioration in receivables turnover. Continuous monitoring and management of these ratios are essential for the company to maintain operational efficiency and financial health.

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Average number of days

The activity ratios for AAR Corp over the past five years show significant fluctuations.

1. Days of Inventory on Hand (DOH):
- In 2020, AAR Corp had 963.69 days of inventory on hand, which decreased to 900.50 days in 2023 before rising sharply to 974.45 days in 2022 and 1,020.79 days in 2021. In 2024, the DOH decreased to 121.82 days, indicating a significant improvement in managing inventory levels.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding have shown a relatively consistent trend with fluctuations. In 2020, DSO was recorded at 30.42 days, gradually increasing to 37.40 days in 2021 and further to 43.01 days in 2022. The DSO decreased to 44.54 days in 2023 and slightly improved to 46.12 days in 2024.

3. Number of Days of Payables:
- AAR Corp's number of days of payables also displayed fluctuations over the years. In 2020, the company had 296.33 days of payables, which decreased to 240.19 days in 2021 and further to 276.85 days in 2022. The number of days of payables decreased significantly to 248.61 days in 2023, and further improved to 39.55 days in 2024.

Overall, the fluctuations in activity ratios indicate changes in the efficiency of managing inventory, collecting receivables, and paying off payables. The decreasing trend in inventory days on hand and payables days, along with a relatively stable days of sales outstanding, suggest improvements in working capital management and operational efficiency.

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Long-term

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. A higher fixed asset turnover ratio indicates that the company is generating more revenue relative to its investment in fixed assets. AAR Corp's fixed asset turnover has been declining over the past years but remains relatively high, indicating a strong ability to generate revenue from its fixed assets.

The total asset turnover ratio measures the efficiency of a company in generating sales from its total assets. A higher total asset turnover ratio indicates that the company is generating more revenue for each dollar invested in total assets. AAR Corp's total asset turnover has also been declining over the past years, suggesting a decrease in efficiency in generating sales from its total assets.

Overall, AAR Corp's long-term activity ratios indicate a declining trend in asset turnover efficiency, which could be a concern if not addressed. Management should analyze the factors contributing to this decline and implement strategies to improve operational efficiency and increase revenue generation from both fixed and total assets. These efforts could help enhance the company's profitability and long-term financial performance.