Api Group Corp (APG)

Short-term

Turnover ratios

The activity ratios of Api Group Corp over the specified periods reflect notable trends and shifts in operational efficiency.

Inventory Turnover:
Historically, the company's inventory turnover rate was high at over 51 times in mid-2020, indicating rapid inventory movement. This high level persisted through late 2020, with a slight increase to 51.47 times in September. However, beginning in late 2020 and early 2021, a declining trend is observed, with rates dropping to approximately 44 in December 2020 and further decreasing to roughly 41-40 in the following quarters, suggesting a slowdown in inventory turnover. The decline becomes more pronounced in 2022, with the rate falling to around 24-29, indicating a significant reduction in inventory efficiency. From early 2023 onward, inventory turnover stabilizes somewhat, fluctuating around 29-34, suggesting a potential stabilization in inventory management but at lower levels than the initial period.

Receivables Turnover:
The receivables turnover ratio was initially around 4.32 times in June 2020, decreasing slightly to approximately 4.07 in September but exhibiting an upward trend thereafter, reaching around 4.59 by December 2020 and about 4.73 in March 2021. After this period, the ratio declines gradually, reaching a low of approximately 2.82 in March 2022. From mid-2022 onward, there is a consistent recovery, with the ratio moving upward to approximately 3.88 by March 2025. This pattern suggests an initial period of slower receivables collection period followed by gradual improvements in collection efficiency over subsequent periods.

Payables Turnover:
Initially, the company demonstrated a higher payable turnover rate, exceeding 19 times in June 2020, with a slight increase to over 20 times in September 2020. Over the following year, this ratio declines steadily, reaching around 12.72 in December 2021. A sharp decrease is observed in early 2022, with a minimum of approximately 8.8 in March 2022. Subsequently, there is variability, with the rate generally rising again from mid-2022 onward, reaching around 11-13 times by March 2024. The fluctuations may indicate changes in payment policies or supplier terms, affecting the company's payment pacing.

Working Capital Turnover:
The working capital turnover ratio shows variability, with higher values witnessed in the earlier periods, such as 6.71 in June 2020, followed by a decline to about 2.24 in December 2021. A significant upward movement occurs in 2022, with the ratio doubling to approximately 8.97 by December 2022, which may reflect more efficient utilization of working capital. The ratio maintains elevated levels into 2023, fluctuating around 7.7 to 9.13, before rising sharply again to nearly 12 in March 2024. The ratio then gradually declines, settling around 8.66 by March 2025, indicating variable efficiency in using working capital across periods.

Summary:
Overall, Api Group Corp's activity ratios suggest a period of initially high operational efficiency that diminished over time, particularly attributable to declining inventory turnover and fluctuating receivables and payables metrics. Nonetheless, certain ratios such as receivables and working capital turnover have experienced partial recovery in recent periods, indicating some improvements in operational efficiency. The overall trend reflects shifts towards more conservative or adjusted inventory management and receivable collections, potentially aligned with changing market or operational conditions.

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Average number of days

The activity ratios of Api Group Corp, as reflected in the data, reveal insights into the company's operational efficiency concerning inventory management, receivables collection, and payables settlement over the specified period.

Days of Inventory on Hand (DOH):
The DOH ratio shows a relatively stable inventory holding period from June 2020 through September 2021, fluctuating narrowly between approximately 7.09 to 9.10 days, indicating efficient inventory turnover. Starting in March 2022, there was a notable increase to approximately 14.92 days, nearly doubling the prior range, which suggests a slowdown in inventory turnover or a strategic buildup of inventory possibly due to supply chain considerations or inventory management adjustments. After this peak, the DOH ratio gradually declined and stabilized around 10.87 to 12.41 days through 2024, reflecting an improved inventory management approach or operational efficiency.

Days of Sales Outstanding (DSO):
The DSO exhibited considerable variation over the examined period. From June 2020 through December 2021, the company maintained relatively moderate collection periods, fluctuating between approximately 77 to 93 days. However, starting in March 2022, there was a significant increase, with DSO reaching a peak of approximately 129.59 days—indicating that receivables were outstanding for an extended period, potentially impacting cash flow. Throughout 2022 and into 2023, the DSO gradually decreased to around 90–97 days, suggesting some improvement in receivables collection efficiency. Nevertheless, the DSO remains higher than pre-2022 levels, reflecting ongoing challenges in receivable management or customer credit policies.

Number of Days of Payables:
The payables period was relatively short in 2020, ranging from approximately 17.67 to 28.70 days, indicative of prompt supplier payments or favorable credit terms. Starting in March 2022, the payables days increased sharply, reaching over 41 days, which may imply extended payment terms or delayed payments to suppliers. During 2023 and into 2024, the payables period fluctuated between approximately 27.84 and 36.68 days, suggesting a relatively balanced approach but still slightly longer than initial levels, which could be strategic to optimize working capital or reflect contractual negotiations.

Overall Analysis:
The activity ratios collectively highlight a period of operational transition for Api Group Corp. Initially, the company maintained efficient inventory turnover and prompt payable cycles. However, the substantial increase in DSO from early 2022 indicates challenges in receivable collection, possibly due to changes in customer credit policies or market conditions. Simultaneously, the increase in payables days suggests an extended payment strategy, perhaps to align cash flow with receivables trends. The stabilization of these ratios in 2024 indicates attempts at operational normalization, with inventory management improving and receivables collection gradually recovering. These shifts emphasize the importance of monitoring receivables and payables to sustain balanced working capital management amid evolving operational circumstances.

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Long-term

Based on the provided data, the long-term activity ratios of Api Group Corp reveal insights into the company's asset utilization efficiency over recent periods.

Fixed Asset Turnover Ratio: This ratio measures the efficiency with which the company utilizes its fixed assets to generate sales. From June 30, 2020, to September 30, 2023, the ratio generally displayed an upward trend, rising from 8.23 to a peak of 14.95, indicating improving utilization of fixed assets. Significant increases are observed between December 31, 2021 (9.23) to March 31, 2022 (12.00), and notably from June 30, 2022 (8.60) to September 30, 2022 (14.95). The upward movement suggests enhanced operational efficiency and possibly strategic investments or optimizations in asset management. However, after September 2023, there are no available data points beyond. The ratio on June 30, 2023, was 10.68, and slightly declined to 11.38 by September 2023, which remains below the peak observed earlier but still indicates relatively high asset utilization.

Total Asset Turnover Ratio: This ratio assesses how effectively the company generates sales from its total assets. The ratio shows a declining trend from June 30, 2020 (1.02) to March 31, 2022 (0.57), indicating that the company's efficiency in generating sales from its total assets decreased during this period. This may reflect increased asset base without proportional growth in sales or more conservative asset management strategies. From March 31, 2022 onward, the ratio exhibits a gradual recovery, reaching 0.86 by March 31, 2023, and maintaining around that level through subsequent periods. The ratio surpassing 0.86 in early 2024 suggests a stabilization or renewed efficiency in utilizing total assets to generate sales.

Overall, the analysis indicates that Api Group Corp experienced a period of improving fixed asset utilization efficiency, particularly from late 2021 into 2022, with the fixed asset turnover ratio reaching notable heights. Conversely, total asset turnover decreased initially but has shown signs of recovery, indicating a trend toward better overall asset utilization efficiency. The company may benefit from continuing to optimize fixed asset management and expanding revenue generation relative to its total assets to sustain and improve these ratios.