Astec Industries Inc (ASTE)

Short-term

Turnover ratios

Astec Industries Inc.'s activity ratios provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital.

1. Inventory turnover:
- The inventory turnover ratio has shown a slight fluctuation over the quarters, ranging from 2.21 to 2.57. This indicates that, on average, Astec Industries Inc. is able to sell and replace its inventory 2.21 to 2.57 times during a year.
- The decreasing trend in inventory turnover may suggest potential issues such as overstocking or slowing sales, which could lead to increased carrying costs or obsolescence.

2. Receivables turnover:
- The receivables turnover ratio has also varied, ranging from 6.83 to 8.76. This indicates that the company collects its receivables approximately 6.83 to 8.76 times per year, reflecting how efficiently it manages its accounts receivable.
- The increasing trend in receivables turnover is generally positive as it signals faster collection of outstanding payments, improving cash flows and reducing the risk of bad debts.

3. Payables turnover:
- The payables turnover ratio has shown fluctuations ranging from 8.57 to 9.65. This indicates that Astec Industries Inc. pays its suppliers approximately 8.57 to 9.65 times per year.
- Generally, a higher payables turnover suggests that the company is able to manage its payables effectively, potentially taking advantage of trade credit terms. However, an extremely high ratio may indicate aggressive payment practices that could strain supplier relationships.

4. Working capital turnover:
- The working capital turnover ratio has varied between 2.63 and 3.31. This ratio reflects how effectively the company utilizes its working capital to generate sales.
- A higher working capital turnover ratio indicates that the company is efficiently utilizing its working capital to support its operations and generate revenue.

Overall, analyzing Astec Industries Inc.'s activity ratios provides important insights into its operational efficiency and effectiveness in managing key aspects of its business activities. Tracking these ratios over time can help identify trends and areas for potential improvement in managing inventory, receivables, payables, and working capital.

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Average number of days

In analyzing Astec Industries Inc.'s activity ratios, we focus on three key metrics: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

1. Days of Inventory on Hand (DOH): Astec's DOH has shown a slight increase over the last eight quarters, with a range from 142.11 days in Q4 2022 to 165.07 days in Q4 2023. This increase indicates that the company is holding onto its inventory for a longer period, which could lead to higher carrying costs and potential obsolescence risk. Astec may need to closely monitor and manage its inventory levels to improve efficiency.

2. Days of Sales Outstanding (DSO): The DSO for Astec has fluctuated over the quarters, ranging from 41.65 days in Q4 2023 to 53.43 days in Q2 2022. A lower DSO suggests that the company is collecting its accounts receivable more quickly, which is beneficial for cash flow and liquidity. Astec's management should continue efforts to reduce DSO to enhance working capital management.

3. Number of Days of Payables: Astec's payables period has remained relatively stable, varying from 37.83 days in Q2 2023 to 42.58 days in Q1 2022. A longer payables period indicates that the company is taking more time to pay its suppliers, which can be advantageous for cash flow management. However, excessively extending payables could strain relationships with suppliers and impact future credit terms.

In conclusion, Astec Industries Inc. should focus on optimizing its inventory management to reduce DOH, enhancing accounts receivable collection to lower DSO, and maintaining a balanced approach to managing payables to support overall working capital efficiency and financial performance.

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Long-term

Astec Industries Inc.'s long-term activity ratios show the efficiency of the company in utilizing its fixed assets and total assets to generate sales revenue.

The fixed asset turnover ratio remained relatively stable over the past eight quarters, with values ranging from 6.73 to 7.56. This ratio measures how effectively the company is using its fixed assets to generate revenue. A higher fixed asset turnover indicates that the company is generating more sales revenue per dollar of invested fixed assets. Astec's consistent high fixed asset turnover suggests efficient utilization of its fixed assets, which is a positive sign for investors.

On the other hand, the total asset turnover ratio also remained fairly steady over the same period, ranging from 1.17 to 1.35. This ratio evaluates the company's ability to generate sales revenue for every dollar of total assets. An increasing total asset turnover ratio indicates that the company is becoming more efficient in generating sales with a lower level of assets. Astec's total asset turnover shows a consistent performance in generating sales revenue with its total assets.

In conclusion, Astec Industries Inc. demonstrates efficiency in utilizing both its fixed assets and total assets to generate sales revenue, as indicated by the stability and relatively high values of the fixed asset turnover and total asset turnover ratios over the past eight quarters. The company's ability to maintain these ratios reflects well on its operational efficiency and management of assets.