Alamo Group Inc (ALG)

Short-term

Turnover ratios

The activity ratios for Alamo Group Inc indicate the efficiency of the company in managing its assets and operations:

1. Inventory Turnover: The company's inventory turnover ratio has fluctuated between 3.12 and 3.54 over the past five years. This ratio measures how many times a company's inventory is sold and replaced over a specific period. A higher turnover ratio is generally better as it indicates efficient inventory management.

2. Receivables Turnover: The data provided shows that the receivables turnover ratio is not available for any of the years from 2020 to 2024. This ratio measures how well a company collects outstanding customer balances. A higher turnover ratio in this case would indicate that the company is collecting receivables more quickly.

3. Payables Turnover: Similar to receivables turnover, the payables turnover ratio is not available for any of the years provided. This ratio measures how efficiently a company pays its suppliers. A higher turnover ratio would indicate that the company is paying its bills promptly.

4. Working Capital Turnover: The working capital turnover ratio has decreased from 3.37 in 2020 to 2.44 in 2024. This ratio shows how effectively a company uses its working capital to generate sales revenue. A decreasing trend in this ratio may suggest inefficiency in utilizing working capital to generate revenue.

In analyzing these activity ratios, it is important to consider industry benchmarks and trends over time to assess the company's operational efficiency and effectiveness in managing its assets and liquidity.

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Average number of days

The Days of Inventory on Hand (DOH) for Alamo Group Inc have shown a fluctuating trend over the observed period. Starting at 96.33 days on December 31, 2020, the DOH increased to 117.17 days on December 31, 2021, then decreased to 113.17 days on December 31, 2022, further dropping to 111.47 days on December 31, 2023, and finally stood at 103.06 days on December 31, 2024.

On the other hand, the Days of Sales Outstanding (DSO) and Number of Days of Payables data were not provided for the period under review, indicating a lack of information for assessing the efficiency of accounts receivable collection and payable turnover.

Analyzing the DOH, a decreasing trend, as seen towards the latter part of the period, signals that the company is managing its inventory more efficiently. However, a high DOH compared to industry standards could signify potential issues like excess inventory or slow-moving products. Without DSO and payables data, a comprehensive analysis of Alamo Group Inc's working capital management through activity ratios is limited.

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Long-term

Alamo Group Inc's fixed asset turnover ratio significantly increased from 27.53 in 2020 to 41.04 in 2021, indicating improved efficiency in generating sales relative to its investment in fixed assets. However, there was a notable decrease in this ratio to 7.35 in 2022, suggesting a potential decline in the company's ability to utilize fixed assets effectively for revenue generation. The absence of data for 2023 and 2024 makes it challenging to assess the trend in fixed asset turnover beyond 2022.

On the other hand, the total asset turnover ratio steadily increased from 1.05 in 2020 to 1.20 in 2023, indicating that Alamo Group Inc became more efficient in generating sales relative to its total assets during this period. However, there was a slight decline in this ratio to 1.12 in 2024, which may suggest a potential decrease in the company's overall asset utilization efficiency.

Overall, fluctuations in these long-term activity ratios reflect changes in Alamo Group Inc's ability to generate sales in relation to its investment in fixed assets and total assets over the years. Further analysis of the underlying factors influencing these ratios would provide a more comprehensive understanding of the company's operational efficiency and asset utilization.