Applied Industrial Technologies (AIT)

Short-term

Turnover ratios

The activity ratios of Applied Industrial Technologies over the analyzed period reveal several noteworthy trends and characteristics:

Inventory Turnover:
The inventory turnover ratio exhibits relative stability, with values fluctuating within a narrow range approximately between 5.65 and 6.49 turns per period. The higher end of this spectrum, observed around June 2024 (6.49), indicates a period where inventory management was particularly efficient, translating to faster inventory liquidation. Conversely, the ratio dipped somewhat in September 2022 (5.76) and farther in December 2022 (5.65), suggesting periods of slower inventory movement. Overall, the consistency suggests disciplined inventory management and a steady turnover rate aligning with industry standards.

Receivables Turnover:
Receivables turnover ratios fluctuate between approximately 5.93 and 7.02 times, reflecting moderate variability in collection efficiency. The ratio peaked early in the period (around September 2020 at 7.02) and again towards the end (March 2024 at 6.17), whereas the lowest value appeared during March 2022 (5.90). Trends indicate generally efficient management of accounts receivable, with slight cyclical dips potentially indicating more lenient credit policies or collection challenges during specific periods. The overall level remains indicative of a balance between credit extension and collection efficiency.

Payables Turnover:
The payables turnover ratio fluctuates within a range of approximately 10.05 to 13.11, with notable peaks in December 2024 (13.11) and September 2023 (12.09). The ratio tends to increase towards the latter part of the period, which may signal a tendency to settle liabilities more rapidly, or a strategic change in payment practices. Periods of lower turnover, such as March 2022 (10.43), may reflect extended credit terms negotiated with suppliers. The overall trend suggests a generally stable payables management system, with some periods of accelerated payments.

Working Capital Turnover:
This ratio demonstrates a declining trend from around 4.71 in December 2021 to approximately 3.37 in September 2024, with minor fluctuations. The decrease indicates that less sales volume is being generated per dollar of working capital, possibly attributable to strategic shifts in asset utilization, operational efficiency, or sales dynamics. Despite this decline, the ratio remains within a moderate range, implying consistent utilization of working capital over time.

Summary:
Applied Industrial Technologies' activity ratios indicate a company maintaining stable inventory and receivables management, with slight variations that are typical in operational cycles. Slight upward trends in payables turnover suggest potential improvements or strategic adjustments in payment practices. The declining working capital turnover ratio warrants attention but does not signal immediate distress; rather, it reflects evolving operational efficiencies or sales volume changes. Overall, the ratios depict a company with disciplined management, consistent operational activity, and a balanced approach to inventory, receivables, and payables dynamics.

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Average number of days

The analysis of Applied Industrial Technologies' activity ratios over the specified periods reveals some noteworthy trends and stability in inventory management, receivables collection, and payables practices.

Days of Inventory on Hand (DOH):
Throughout the period from September 2020 to June 2025, the company's DOH has maintained a relatively stable range with minor fluctuations. It fluctuated between approximately 56.24 days (June 2024) and 64.59 days (December 2022). The moderate increase in inventory days during late 2022 suggests a slight buildup of inventory, possibly due to changes in supply chain conditions or inventory policies. Conversely, a decline to around 56.24 days in mid-2024 indicates efforts to streamline inventory or respond to market demand fluctuations. Overall, the inventory management appears consistent, with current levels implying a balanced approach between maintaining sufficient stock and minimizing excess.

Days of Sales Outstanding (DSO):
The company’s collection period has shown variability, ranging from approximately 52.01 days (September 2020) to around 61.89 days (March 2022). There was a notable increase during 2021, with DSO reaching above 60 days, indicating longer receivable collection periods at that time. However, starting from late 2022, DSO has generally decreased, often settling below 60 days and even approaching around 53.92 days in December 2023. This downward trend suggests some improvement in receivables collection efficiency, possibly due to tighter credit policies or more effective collection efforts. Nonetheless, in 2025, DSO has increased slightly again, indicating potential challenges in receivables management or changes in customer payment behavior.

Number of Days of Payables:
The payables period has remained relatively stable over the same timeframe, averaging around 30 days, with minor fluctuations. The shortest payables days were observed around December 2024 at approximately 27.85 days, whereas the longest was around 36.30 days in March 2021. This stability suggests consistent credit terms with suppliers and disciplined management of payables, enabling the company to efficiently utilize supplier credit without undue delay. Slight increases in payables days around mid-2021 and late 2022 may reflect strategic delays in payments or negotiated supplier terms.

Overall Assessment:
Applied Industrial Technologies has demonstrated steady inventory turnover, with no significant accumulation of stock beyond typical cycles. The receivables collection period has improved in recent years, which could positively impact cash flow and liquidity management. The consistent payables days indicate disciplined credit management with suppliers. Together, these activity ratios suggest a balanced operational cycle, with the company effectively managing its working capital components to maintain operational stability and liquidity throughout the observed period.

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Long-term

The analysis of Applied Industrial Technologies’ long-term activity ratios, focusing on Fixed Asset Turnover and Total Asset Turnover, reveals insights into the company's efficiency in utilizing its assets over time.

Fixed Asset Turnover Ratio:

This ratio measures how effectively the company generates sales from its fixed assets. The data indicates fluctuating performance across multiple periods. The ratio generally maintained high levels, with notable peaks around December 2021 to March 2023, where values reached approximately 31.27 and 37.41, respectively. These elevated figures suggest periods of highly efficient deployment of fixed assets to generate sales. Conversely, there are periods of decline, notably around June and September 2021, where the ratio dropped to approximately 15.96 and 16.23, respectively, implying less efficient use of fixed assets during those times. The ratio exhibits significant variability, suggesting fluctuations in asset utilization efficiency, possibly driven by operational, organizational, or investment changes. Recent data from September 2023 shows a ratio of approximately 20.6, indicative of moderate efficiency once again. Short-term fluctuations and peaks may reflect seasonal adjustments, strategic shifts, or asset base changes.

Total Asset Turnover Ratio:

This metric assesses overall asset efficiency in generating sales. The data exhibits a relatively stable upward trend from 1.39 in September 2020 to a peak of approximately 1.65 in March 2022. Post-peak, the ratio demonstrates minor fluctuations but remains within a narrow range, generally between 1.49 and 1.65, indicating consistent utilization of the total asset base. Towards the most recent periods, there is a slight downward trend, with values approaching 1.44 by June 2025. This may signify a stabilization in asset utilization, albeit at slightly lower relative levels compared to earlier periods. The consistency in total asset turnover suggests the company maintains a stable approach to deploying its total assets to generate sales over time.

Summary:

Overall, Applied Industrial Technologies' fixed asset turnover ratio indicates periods of both high efficiency and notable fluctuation, reflecting potential operational adjustments or asset management strategies. The total asset turnover ratio portrays a generally stable performance with minor downtrends in recent periods, suggesting steady overall asset utilization. The interplay of these ratios highlights the company’s capacity to effectively leverage its assets, with recent data pointing towards a pattern of maintained efficiency, coupled with fluctuating fixed asset deployment efficiency over the analyzed periods.