Astec Industries Inc (ASTE)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.84 | 3.16 | 3.61 | 3.95 | 3.88 |
| Receivables turnover | 8.73 | 7.33 | 7.73 | 8.89 | 9.70 |
| Payables turnover | 11.08 | 11.60 | 13.12 | 18.71 | 19.99 |
| Working capital turnover | 3.17 | 3.01 | 2.65 | 2.61 | 3.50 |
Activity ratios provide insights into how effectively a company is managing its assets and liabilities to generate revenue and cash flows. Let's analyze the activity ratios of Astec Industries Inc. over the past five years:
1. Inventory turnover:
The inventory turnover ratio measures how efficiently a company is managing its inventory. A declining trend in inventory turnover may indicate overstocking or slow-moving inventory, which could tie up valuable capital. In Astec Industries Inc.'s case, the inventory turnover has decreased from 3.16 in 2019 to 2.21 in 2023. This may suggest that the company is holding onto inventory for longer periods, potentially impacting liquidity and profitability.
2. Receivables turnover:
The receivables turnover ratio assesses how quickly a company collects cash from its credit sales. A higher turnover indicates effective credit management and timely collection of receivables. Astec Industries Inc.'s receivables turnover has fluctuated over the years, with a peak of 9.37 in 2019 and a current value of 8.76 in 2023. This may imply some variability in the company's collection efficiency, which could impact cash flow management.
3. Payables turnover:
The payables turnover ratio measures how quickly a company pays its suppliers. A higher turnover ratio implies that the company is efficient in settling its payables. Astec Industries Inc.'s payables turnover has decreased from 16.27 in 2019 to 8.62 in 2023. A lower turnover suggests that the company may be taking longer to pay its suppliers, potentially affecting vendor relationships and cash flow management.
4. Working capital turnover:
The working capital turnover ratio evaluates how effectively a company utilizes its working capital to generate revenue. A higher turnover indicates efficient utilization of resources. Astec Industries Inc.'s working capital turnover has fluctuated, with a peak of 3.51 in 2019 and a current value of 3.18 in 2023. This suggests some variability in the company's ability to generate revenue relative to its working capital over the years.
Overall, the analysis of Astec Industries Inc.'s activity ratios highlights potential areas for further examination, such as inventory management, receivables collection efficiency, payables management, and working capital utilization, to ensure efficient operations and sustainable growth.
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 | 128.40 | 115.43 | 101.06 | 92.42 | 94.00 |
| Days of sales outstanding (DSO) | days | 41.83 | 49.82 | 47.22 | 41.06 | 37.61 |
| Number of days of payables | days | 32.95 | 31.45 | 27.81 | 19.50 | 18.26 |
Analyzing the activity ratios of Astec Industries Inc., we can see a trend of increasing Days of Inventory on Hand (DOH) over the past five years, indicating that the company is taking longer to sell its inventory. This may suggest inefficiencies in managing inventory levels or potential issues with demand forecasting.
In contrast, the Days of Sales Outstanding (DSO) ratio has fluctuated over the years but generally reflects a decrease in the time it takes for the company to collect its accounts receivable. This could be a positive sign of effective credit and collection policies, improving the company's liquidity position.
The Number of Days of Payables ratio has also increased steadily over the years, indicating that Astec Industries is taking more time to pay its suppliers. This can sometimes be a strategic move to preserve cash or negotiate better payment terms with vendors, but it could also signal potential liquidity challenges or strained relationships with suppliers.
Overall, the activity ratios suggest a complex picture of Astec Industries' operating efficiency and working capital management. Further analysis would be necessary to assess the impact of these trends on the company's financial performance and strategic decision-making.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 7.10 | 7.33 | 6.38 | 5.96 | 6.13 |
| Total asset turnover | 1.26 | 1.25 | 1.21 | 1.22 | 1.46 |
The fixed asset turnover ratio for Astec Industries Inc. has been relatively stable over the past five years, ranging from 5.93 to 7.34, with a slight decrease observed in 2021 compared to the previous years. This indicates that the company generates a high level of sales revenue relative to its investment in fixed assets. A higher fixed asset turnover ratio generally suggests efficient utilization of fixed assets to generate sales.
On the other hand, the total asset turnover ratio has remained fairly consistent around the 1.20 to 1.46 range in the same period. This metric indicates how effectively the company is using its total assets to generate sales revenue. A total asset turnover ratio below 1 suggests that the company may not be fully utilizing its assets to generate revenue efficiently.
In summary, Astec Industries Inc. has shown strong performance in terms of fixed asset turnover, reflecting efficient utilization of fixed assets to generate sales. However, there may be room for improvement in terms of total asset turnover to optimize the utilization of all assets for revenue generation. These ratios provide valuable insights into the company's operational efficiency and asset management strategies over time.