Archrock Inc (AROC)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.90 | 7.02 | 6.45 | 6.59 | 9.52 |
| Receivables turnover | 8.85 | 7.17 | 5.71 | 6.71 | 7.43 |
| Payables turnover | 10.75 | 9.41 | 8.48 | 12.34 | 19.67 |
| Working capital turnover | 26.33 | 14.57 | 9.41 | 11.47 | 11.03 |
Archrock Inc's activity ratios provide insights into how efficiently the company is managing its assets and liabilities to generate revenue.
1. Inventory Turnover: The inventory turnover ratio measures how many times Archrock Inc sells and replaces its inventory within a specific period. From 2020 to 2024, the inventory turnover has decreased slightly from 9.52 to 6.90. This indicates that the company is taking longer to sell its inventory, possibly due to changes in demand or inventory management practices.
2. Receivables Turnover: The receivables turnover ratio reflects how efficiently Archrock Inc is collecting payments from customers. The data shows fluctuations in this ratio over the years, with a peak at 8.85 in 2024. A higher receivables turnover indicates faster collection of receivables, which is positive for cash flow and liquidity.
3. Payables Turnover: The payables turnover ratio measures how quickly Archrock Inc pays its suppliers. The ratio has decreased from 19.67 in 2020 to 10.75 in 2024, indicating that the company is taking longer to pay its bills. This could be due to changing payment terms or negotiations with suppliers.
4. Working Capital Turnover: The working capital turnover ratio shows how efficiently Archrock Inc is utilizing its working capital to generate revenue. The ratio has increased significantly from 2020 to 2024, reaching 26.33. A higher ratio suggests that the company is generating more revenue per unit of working capital, which can indicate improved operational efficiency.
Overall, while there are fluctuations in these activity ratios over the years, it is essential for Archrock Inc to analyze the underlying reasons for these changes and take appropriate actions to improve efficiency in managing its assets and liabilities.
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 | 52.89 | 51.96 | 56.61 | 55.38 | 38.34 |
| Days of sales outstanding (DSO) | days | 41.25 | 50.94 | 63.97 | 54.44 | 49.12 |
| Number of days of payables | days | 33.95 | 38.78 | 43.03 | 29.58 | 18.56 |
Archrock Inc's activity ratios provide insights into how efficiently the company manages its inventory, collects receivables, and pays its suppliers.
1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, Archrock holds its inventory before selling it.
- It increased from 38.34 days in 2020 to 52.89 days in 2024.
- The rising trend indicates that inventory turnover has slowed down over time, which may suggest issues with managing inventory levels efficiently.
2. Days of Sales Outstanding (DSO):
- DSO reflects how long it takes, on average, for Archrock to collect payments from its customers.
- It fluctuated between 41.25 days in 2024 and 63.97 days in 2022.
- The decreasing trend from 2022 to 2024 is positive, indicating improved efficiency in collecting receivables.
3. Number of Days of Payables:
- This ratio represents the number of days it takes Archrock to pay its suppliers.
- It ranged from 18.56 days in 2020 to 43.03 days in 2022.
- The increasing trend suggests that the company is taking longer to pay its suppliers, which could be a strategy to improve cash flow or negotiate better terms.
In summary, Archrock Inc should focus on optimizing its inventory management to improve inventory turnover, continue efforts to reduce DSO for faster collections, and evaluate the impact of extending payment days on supplier relationships and liquidity.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.35 | 0.39 | 0.36 | 0.32 | 0.32 |
| Total asset turnover | 0.31 | 0.33 | 0.30 | 0.27 | 0.28 |
The long-term activity ratios of Archrock Inc show stability and some improvement over the years.
1. Fixed Asset Turnover: The fixed asset turnover ratio measures how effectively the company generates revenue from its fixed assets. Archrock Inc has maintained a relatively stable fixed asset turnover ratio, ranging from 0.32 in 2020 and 2021 to 0.35 in 2024. This indicates that the company is generating approximately 0.32 to 0.35 times in revenue for every dollar invested in fixed assets. The increase in the ratio from 2020 to 2024 suggests a slight improvement in the efficiency of utilizing fixed assets to generate revenue.
2. Total Asset Turnover: The total asset turnover ratio reflects the company's ability to generate sales from its total assets. Archrock Inc's total asset turnover ratio has shown a fluctuating trend, from 0.27 in 2021 to 0.33 in 2023. In 2024, the ratio slightly decreased to 0.31. This indicates that the company is generating approximately 0.27 to 0.33 times in revenue for every dollar invested in total assets. The fluctuation in the total asset turnover ratio suggests varying efficiency in utilizing all assets to generate sales.
Overall, Archrock Inc's long-term activity ratios indicate a stable performance in generating revenue from both fixed and total assets, with some improvements in fixed asset turnover and fluctuations in total asset turnover over the years.