Alamo Group Inc (ALG)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.27 | 3.23 | 3.12 | 3.59 | 3.16 |
| Receivables turnover | 4.67 | 4.75 | 5.57 | 5.40 | 4.46 |
| Payables turnover | 12.40 | 11.66 | 9.86 | 11.55 | 10.31 |
| Working capital turnover | 2.86 | 2.82 | 3.18 | 3.25 | 2.74 |
The activity ratios for Alamo Group Inc. provide insights into the efficiency of the company's operations in managing inventory, accounts receivable, accounts payable, and working capital.
1. Inventory Turnover: The inventory turnover ratio measures how effectively the company is managing its inventory. Alamo Group's inventory turnover has been relatively stable over the five-year period, ranging from 3.12 to 3.79. A higher turnover indicates that inventory is sold more frequently, which can be a positive sign of efficient inventory management.
2. Receivables Turnover: This ratio reflects how quickly a company collects its accounts receivable. Alamo Group's receivables turnover has fluctuated over the years but has generally been at a healthy level, ranging from 4.46 to 5.57. A higher turnover suggests that the company is efficient in collecting payments from customers.
3. Payables Turnover: The payables turnover ratio shows how quickly the company pays its suppliers. Alamo Group has shown an increasing trend in payables turnover over the years, indicating that the company is taking longer to pay its suppliers. This can be seen as a positive sign as it shows effective management of accounts payable.
4. Working Capital Turnover: This ratio measures how efficiently the company is using its working capital to generate revenue. Alamo Group's working capital turnover has varied slightly but remained relatively stable over the period, ranging from 2.74 to 3.37. A higher turnover indicates that the company is generating more revenue per unit of working capital, which is a positive indicator of operational efficiency.
Overall, the activity ratios suggest that Alamo Group Inc. has been relatively efficient in managing its inventory, accounts receivable, accounts payable, and working capital over the past five years. The stable or improving ratios imply that the company has been effectively utilizing its resources to drive revenue and operations.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 111.47 | 113.17 | 117.17 | 101.77 | 115.53 |
| Days of sales outstanding (DSO) | days | 78.21 | 76.80 | 65.56 | 67.59 | 81.78 |
| Number of days of payables | days | 29.44 | 31.31 | 37.02 | 31.61 | 35.39 |
To analyze the activity ratios of Alamo Group Inc., let's look at the trends in days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables over the past five years.
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows a fluctuating pattern over the past five years, ranging from a low of 96.33 days in 2020 to a high of 117.17 days in 2021.
- In 2023, the DOH decreased slightly to 111.47 days from the previous year.
- A lower DOH indicates that the company is efficiently managing its inventory levels, which can lead to cost savings and improved cash flow.
2. Days of Sales Outstanding (DSO):
- The trend in DSO also displays variability over the five-year period, with the lowest figure of 65.56 days in 2021 and the highest of 81.78 days in 2019.
- In 2023, the DSO increased to 78.21 days compared to the previous year, indicating that the company is taking longer to collect payments from customers.
- A higher DSO may suggest potential liquidity challenges or deteriorating credit quality of customers.
3. Number of Days of Payables:
- The trend in the number of days of payables has been relatively stable over the past five years, with minor fluctuations.
- In 2023, the number of days of payables decreased to 29.44 days from 31.31 days in 2022.
- A lower number of days of payables suggests that the company is paying its suppliers more quickly, which can strain liquidity but may also improve supplier relationships.
Overall, the analysis of Alamo Group Inc.'s activity ratios indicates mixed performance in managing inventory, collecting receivables, and paying payables over the past five years. Monitoring these ratios is essential for assessing the company's operational efficiency and liquidity position.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 10.14 | 9.76 | 8.75 | 7.49 | 6.97 |
| Total asset turnover | 1.20 | 1.16 | 1.11 | 1.04 | 0.92 |
The long-term activity ratios of Alamo Group Inc. showcase the company's efficiency in utilizing its fixed assets and total assets to generate sales revenue over the last five years.
The fixed asset turnover ratio has shown a consistent upward trend from 5.15 in 2019 to 8.21 in 2023. This indicates that Alamo Group has been able to generate more revenue per dollar of fixed assets invested, reflecting improved efficiency in utilizing its long-term resources to drive sales growth.
Similarly, the total asset turnover ratio has also been steadily increasing, from 0.92 in 2019 to 1.20 in 2023. This indicates that Alamo Group has been more effective in generating sales revenue relative to its total assets. The increase in this ratio suggests improved efficiency in asset utilization over the years.
Overall, the increasing trends in both fixed asset turnover and total asset turnover ratios indicate that Alamo Group has been successful in leveraging its long-term assets to drive sales and improve operational efficiency. This demonstrates the company's ability to efficiently manage and utilize its long-term resources to generate revenue and create value for its stakeholders.