Api Group Corp (APG)

Short-term

Turnover ratios

Based on the provided activity ratios for Api Group Corp, a detailed analysis reveals several key trends over the period from December 31, 2020, to December 31, 2024.

Inventory Turnover: The ratio demonstrates a significant decline from 44.23 in 2020 to 29.72 in 2022, indicating a slowing in the rate at which inventory is sold and replaced. Subsequently, there is a slight recovery to 33.25 in 2023 and a modest increase to 33.85 in 2024. The initial decline might suggest accumulation of inventory or decreased sales velocity, while the subsequent stabilization and marginal improvement could reflect operational adjustments or improved sales efficiency.

Receivables Turnover: The ratio shows a downward trend from 4.59 in 2020 to a low of 3.70 in 2022, with a slight increase to 3.78 in 2023 before returning to 3.70 in 2024. This pattern indicates an extended collection period on receivables over time, reflecting a decrease in collection efficiency or changes in credit policies. The stabilization around 3.70 suggests that the receivables collection cycle has remained relatively constant in recent years.

Payables Turnover: The ratio exhibits a declining trend from 18.87 in 2020 to 9.89 in 2022, followed by a minor uptick to 10.57 in 2023 and a slight decrease to 9.74 in 2024. A decreasing payables turnover ratio indicates an elongation in the accounts payable period, possibly reflecting improved supplier credit terms or a strategic delay in payments. The slight fluctuation in the ratio in recent years suggests a stabilization of vendor payment practices.

Working Capital Turnover: This ratio decreased sharply from 6.02 in 2020 to 2.24 in 2021, then increased significantly to 8.97 in 2022, followed by marginal increases to 8.94 in 2023 and 9.08 in 2024. The initial drop could suggest a period of reduced efficiency in utilizing working capital, while the subsequent increase indicates improved efficiency in generating sales from working capital investments. The stabilization in recent years points toward a more optimized working capital management.

Overall, the activity ratios indicate a period of transitional dynamics for Api Group Corp. The significant decrease in inventory and receivables turnover ratios during 2020-2022 points to potential challenges in sales efficiency and inventory management. However, the subsequent stabilization and improvements in ratios such as inventory and working capital turnover suggest efforts at operational optimization, leading to more efficient utilization of resources in the later years. The declining payables turnover ratio over the entire period indicates an extension in payment cycles, which could reflect strategic supplier negotiations or liquidity management strategies.

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Average number of days

The activity ratios of Api Group Corp, specifically the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and the Number of Days of Payables, reveal insights into the company's operational efficiency and working capital management from December 31, 2020, through December 31, 2024.

Days of Inventory on Hand (DOH):
The DOH metric increased from 8.25 days in 2020 to a peak of 12.28 days in 2022, indicating that the company held inventory for a longer duration during this period. Subsequently, the DOH decreased slightly to 10.98 days in 2023 and further to 10.78 days in 2024. This pattern suggests a period of inventory accumulation, possibly due to stockpiling in anticipation of demand fluctuations or supply chain considerations, followed by an effort to optimize inventory levels to reduce holding costs.

Days of Sales Outstanding (DSO):
The DSO grew steadily over the years, from 79.47 days in 2020 to approximately 98.66 days in 2024. This trend indicates that the company has experienced increasingly longer periods to collect receivables, suggesting a lengthening of credit terms or potential challenges in receivables collection. The extension of collection periods impacts cash flow, highlighting the importance of efficient receivables management during this timeframe.

Number of Days of Payables:
The days of payables increased from 19.34 days in 2020 to 37.48 days in 2024. This rise implies that Api Group Corp has been negotiating longer payment periods with suppliers, which can be a strategy to conserve cash and improve liquidity. The increase suggests a deliberate effort to delay cash outflows, aligning with the observed trend of extended receivable collection times.

Overall Observations:
The combination of rising DSO and days of payables indicates a parallel elongation of both receivable and payable cycles, which may reflect a strategic shift toward managing working capital and liquidity positions more conservatively. The fluctuations in DOH, along with these trends, point to periods of inventory management adjustments, possibly to balance supply chain constraints against inventory holding costs. Continuous increases in collection and payment periods stress the importance of monitoring cash flow and maintaining effective receivables and payables management practices to sustain operational efficiency.

In summary, Api Group Corp has experienced a general trend of lengthening working capital cycles over the analyzed period, emphasizing the need for ongoing assessment of operational efficiency and liquidity strategies.

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Long-term

The long-term activity ratios for Api Group Corp indicate notable trends in asset utilization efficiency over the evaluated period. The Fixed Asset Turnover ratio experienced a significant upward trajectory from 7.76 on December 31, 2020, to 9.23 on December 31, 2021, followed by a substantial acceleration to 16.11 by December 31, 2022. This progression suggests a markedly improved utilization of fixed assets, implying enhanced operational efficiency or a possible shift toward more asset-light operational strategies.

However, the absence of data for December 31, 2023, and 2024 precludes further observation of this particular efficiency metric in the most recent years. It may indicate a pause in reported figures or a potential change in asset management practices.

Conversely, the Total Asset Turnover ratio demonstrates a relatively stable pattern over the same period, with values fluctuating modestly between 0.76 and 0.91. The ratio decreased slightly from 0.88 in 2020 to 0.76 in 2021, then increased marginally to 0.81 in 2022, reaching 0.91 in 2023 before decreasing slightly again to 0.86 in 2024. These movements suggest a consistent, moderate capacity to generate sales from the total assets invested in the business, with a slight improvement observed in 2023 before a minor decline in 2024.

Overall, the data indicates that Api Group Corp enhanced the efficiency of its fixed asset utilization markedly between 2020 and 2022. The stability of the total asset turnover ratio reflects steady overall asset efficiency, with some fluctuations that suggest minor shifts in operational performance or asset management strategies.