ArcBest Corp (ARCB)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | — | 75.02 | 43.96 | 38.80 | 36.34 |
| Receivables turnover | 9.71 | 9.17 | 9.01 | 6.71 | 8.78 |
| Payables turnover | 10.45 | 8.52 | 6.55 | 5.00 | 8.03 |
| Working capital turnover | 433.24 | 24.14 | 24.11 | 54.47 | 11.70 |
ArcBest Corp's activity ratios provide valuable insights into how efficiently the company is managing its assets and liabilities. Here is a detailed analysis based on the provided data:
1. Inventory Turnover:
- The inventory turnover ratio measures how effectively the company is managing its inventory. From 2020 to 2024, ArcBest Corp's inventory turnover ratio has shown a consistent upward trend, increasing from 36.34 to 75.02. This indicates that the company is selling its inventory more quickly over the years, which is a positive sign of efficient inventory management.
2. Receivables Turnover:
- The receivables turnover ratio reflects how efficiently the company is collecting payments from customers. ArcBest Corp's receivables turnover ratio fluctuated between 6.71 and 9.71 from 2020 to 2024. The increasing trend suggests that the company has been able to collect payments more efficiently over time.
3. Payables Turnover:
- The payables turnover ratio shows how quickly the company is paying off its suppliers. ArcBest Corp's payables turnover ratio increased from 5.00 in 2021 to 10.45 in 2024. A higher payables turnover ratio indicates that the company is managing its payables more effectively and possibly taking advantage of credit terms from suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently the company is utilizing its working capital to generate sales. ArcBest Corp's working capital turnover ratio increased significantly from 2020 to 2024, rising from 11.70 to 433.24. This sharp increase indicates that the company has been able to generate a much higher level of sales relative to its working capital, showcasing strong operational efficiency and effective utilization of resources.
Overall, the activity ratios of ArcBest Corp suggest improving efficiency in inventory management, receivables collection, payables management, and working capital utilization over the years. These trends are positive indicators of the company's operational performance and financial health.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | 4.87 | 8.30 | 9.41 | 10.04 |
| Days of sales outstanding (DSO) | days | 37.59 | 39.80 | 40.52 | 54.39 | 41.58 |
| Number of days of payables | days | 34.93 | 42.82 | 55.68 | 73.04 | 45.44 |
ArcBest Corp's activity ratios reflect the efficiency with which the company manages its inventory, accounts receivable, and accounts payable.
1. Days of Inventory on Hand (DOH):
- The company's days of inventory on hand decreased from 10.04 days in 2020 to 4.87 days in 2023, showcasing a significant improvement in inventory management efficiency. However, there seems to be missing data for 2024.
- A lower DOH indicates that the company is selling its inventory quicker, reducing carrying costs and potential obsolescence risks.
2. Days of Sales Outstanding (DSO):
- The days of sales outstanding fluctuated over the years, from 41.58 days in 2020 to 37.59 days in 2024, showing a general trend of improvement in collecting receivables efficiently.
- A decrease in DSO suggests that the company is collecting its receivables faster, which enhances cash flow and reduces the risk of bad debts.
3. Number of Days of Payables:
- ArcBest Corp has been managing its payables effectively, with the number of days of payables decreasing from 45.44 days in 2020 to 34.93 days in 2024.
- A decrease in days of payables indicates that the company is taking longer to pay its suppliers, potentially improving cash flow management and relationships with vendors.
Overall, the trend in these activity ratios suggests that ArcBest Corp has been efficiently managing its working capital components, optimizing its inventory levels, collecting receivables promptly, and strategically managing its payables.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.92 | 4.83 | 6.67 | 5.74 | 4.34 |
| Total asset turnover | 1.72 | 1.78 | 2.14 | 1.89 | 1.65 |
Long-term activity ratios provide insights into how efficiently a company utilizes its assets and manages its operations over an extended period. ArcBest Corp's fixed asset turnover has shown a positive trend from 4.34 in 2020 to 6.67 in 2022, indicating that the company is generating more revenue relative to its investment in fixed assets. However, there was a slight decline to 4.83 in 2023 and further down to 3.92 in 2024, suggesting a decrease in the efficiency of utilizing fixed assets to generate sales.
In terms of total asset turnover, ArcBest Corp's ratio increased from 1.65 in 2020 to 2.14 in 2022, reflecting that the company's total assets were able to generate more revenue. However, the ratio declined to 1.78 in 2023 and 1.72 in 2024, indicating that the company may not be managing its total assets as efficiently in generating sales compared to previous years.
Overall, although the fixed asset turnover ratio improved significantly in the initial years of the analysis period, it witnessed a decline in the latter years. The total asset turnover ratio also initially improved but later showed a decreasing trend. This analysis suggests that ArcBest Corp may need to focus on efficiently managing its assets to sustain or improve its long-term operational efficiency and profitability.