Applied Industrial Technologies (AIT)

Short-term

Turnover ratios

Working with the activity ratios of Applied Industrial Technologies allows for a deeper understanding of the company’s operational efficiency over the past five years.

1. Inventory Turnover:
- The inventory turnover ratio for Applied Industrial Technologies has hovered around 8 times over the past five years, indicating that the company has been able to sell and replace its inventory approximately 8 times a year.
- This consistent turnover suggests that the company manages its inventory effectively, keeping it at optimal levels to meet customer demand without excess or shortages.

2. Receivables Turnover:
- The receivables turnover ratio has remained relatively stable, fluctuating between 5.77 and 7.14 over the past five years.
- This indicates that the company collects its accounts receivable roughly 6 to 7 times a year on average, showcasing efficient management of credit sales and collection processes.

3. Payables Turnover:
- Applied Industrial Technologies’ payables turnover has gradually decreased from 17.17 to 15.03 over the five-year period.
- This suggests that the company is taking longer to pay its suppliers, which may indicate either improved credit terms or potential cash flow management strategies in place.

4. Working Capital Turnover:
- The working capital turnover ratio for the company has shown a decreasing trend from 4.38 to 3.53 over the five-year period.
- This may indicate a potential inefficiency in the utilization of working capital to generate revenue, as lower turnover ratios suggest that the company is generating less revenue per dollar of working capital.

Overall, analyzing these activity ratios provides insights into Applied Industrial Technologies’ operational efficiency, inventory management, accounts receivable collection, and working capital utilization over the five-year period.

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Average number of days

The activity ratios of Applied Industrial Technologies provide insights into the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH):
- Applied Industrial Technologies' DOH has shown a fluctuating trend over the past five years, ranging from 43.15 days to 47.12 days.
- A lower DOH indicates that the company is managing its inventory efficiently, as it takes fewer days to sell its inventory.
- The slight decrease in DOH from 2022 to 2024 suggests improved inventory management efficiency during this period.

2. Days of Sales Outstanding (DSO):
- The DSO of Applied Industrial Technologies has also exhibited variability over the years, ranging from 51.12 days to 63.31 days.
- A lower DSO indicates that the company is collecting its accounts receivable faster, which is a positive sign of efficient credit and collection policies.
- The increasing trend in DSO from 2022 to 2024 suggests a potential need for the company to enhance its accounts receivable collection process.

3. Number of Days of Payables:
- Applied Industrial Technologies has maintained a relatively stable number of days of payables with fluctuations between 21.26 days and 27.73 days.
- A longer period of payables suggests that the company is taking longer to pay its suppliers, thereby improving its cash flow position.
- The increase in days of payables from 2020 to 2023 followed by a slight decrease in 2024 may indicate some changes in the company's payment terms with suppliers.

In summary, while Applied Industrial Technologies has shown varying performance in its activity ratios over the years, the company should focus on optimizing its inventory turnover, accounts receivable collection, and payables management to enhance its operational efficiency and overall financial performance.

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Long-term

The long-term activity ratios of Applied Industrial Technologies, as indicated by the fixed asset turnover and total asset turnover ratios, illustrate the efficiency with which the company utilizes its assets to generate sales over the last five years.

- Fixed Asset Turnover: Applied Industrial Technologies has shown a consistent improvement in its fixed asset turnover ratio from 26.36 in 2020 to 38.14 in 2023, suggesting that the company has been successful in generating higher sales revenue relative to its investment in fixed assets. However, in 2024, the ratio slightly decreased to 37.78, indicating a slight dip in the efficiency of utilizing fixed assets to generate sales.

- Total Asset Turnover: The total asset turnover ratio of Applied Industrial Technologies has also displayed a generally positive trend, increasing from 1.41 in 2020 to a peak of 1.60 in 2023 before slightly dropping to 1.52 in 2024. This indicates that the company has been effective in generating sales relative to its total assets over the years, with a marginal decline in the most recent year.

Overall, the company's long-term activity ratios suggest that Applied Industrial Technologies has been efficiently utilizing both its fixed and total assets to drive sales growth, with some minor fluctuations in the efficiency levels observed in the most recent year.