Armstrong World Industries Inc (AWI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 14.56 | 13.05 | 15.05 | 13.59 | 16.64 |
| Receivables turnover | 11.24 | 10.95 | 10.06 | 11.66 | 12.17 |
| Payables turnover | 12.80 | 11.27 | 10.77 | 11.30 | 12.75 |
| Working capital turnover | 10.53 | 7.08 | 9.77 | 6.54 | 11.61 |
Inventory turnover for Armstrong World Industries Inc. has shown a consistent range between 7 to 9 times over the past five years, indicating that the company efficiently manages its inventory levels and sells through its inventory relatively quickly.
Receivables turnover has been increasing steadily over the years, from 9.02 in 2019 to 11.58 in 2023. This suggests that the company is collecting its accounts receivable at a faster rate, potentially improving its liquidity and reducing the risk of bad debts.
Unfortunately, there is no information provided for payables turnover, which could have provided insights into how quickly the company pays its suppliers.
The working capital turnover ratio has fluctuated over the years but generally remained above 6 times, reaching as high as 11.64 in 2019. A higher working capital turnover indicates that the company efficiently utilizes its working capital to generate sales revenue.
In general, Armstrong World Industries Inc. appears to have effective control over its inventories and receivables, as evidenced by the inventory turnover and receivables turnover ratios. Further analysis of payables turnover would provide a more comprehensive view of the company's efficiency in managing its working capital cycle.
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 | 25.06 | 27.97 | 24.25 | 26.86 | 21.94 |
| Days of sales outstanding (DSO) | days | 32.47 | 33.35 | 36.30 | 31.31 | 30.00 |
| Number of days of payables | days | 28.51 | 32.40 | 33.90 | 32.30 | 28.64 |
Armstrong World Industries Inc.'s activity ratios reflect the efficiency of the company in managing its inventory and receivables.
1. Days of inventory on hand (DOH):
- The trend in DOH shows fluctuations over the past five years, ranging from a low of 38.88 days in 2019 to a high of 51.21 days in 2022. In 2023, the DOH decreased to 47.56 days, indicating that the company was able to sell its inventory more quickly compared to the previous year. This suggests an improvement in inventory turnover and potentially more efficient inventory management.
2. Days of sales outstanding (DSO):
- DSO indicates the average number of days it takes for the company to collect payment from its customers. The trend in DSO for Armstrong World Industries Inc. has been fluctuating over the years, with the lowest DSO of 31.40 days in 2021 and the highest of 40.47 days in 2019. In 2023, DSO decreased to 31.51 days, indicating that the company was able to collect payments from its customers more quickly compared to the previous year. This suggests efficient accounts receivable management.
3. Number of days of payables:
- Unfortunately, data on the number of days of payables for Armstrong World Industries Inc. is not provided in the table. This ratio is essential to understanding how long it takes the company to pay its suppliers, which can impact cash flow and working capital management.
Overall, the trends in inventory turnover and receivables collection for Armstrong World Industries Inc. indicate improving efficiency, which can positively impact the company's cash flow and overall financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.20 | 2.22 | 2.02 | 1.72 | 1.97 |
| Total asset turnover | 0.75 | 0.73 | 0.64 | 0.53 | 0.69 |
Armstrong World Industries Inc.'s long-term activity ratios indicate the efficiency with which the company employs its fixed assets and total assets to generate sales. The fixed asset turnover ratio has shown a steady improvement over the past five years, increasing from 1.98 in 2019 to 2.29 in 2023. This suggests that the company is generating more revenue per dollar of fixed assets invested, which is a positive sign of operational efficiency.
Similarly, the total asset turnover ratio has also exhibited an upward trend, rising from 0.70 in 2019 to 0.77 in 2023. This indicates that Armstrong World Industries Inc. is becoming more effective in utilizing its total assets to generate sales. The increasing ratio suggests that the company is generating more revenue relative to its total asset base, reflecting improved efficiency in asset utilization.
Overall, the improving trend in both fixed asset turnover and total asset turnover ratios for Armstrong World Industries Inc. signifies enhanced operational efficiency and effectiveness in utilizing its assets to drive sales growth. This trend indicates that the company is efficiently managing its assets to generate revenue, which could positively impact its long-term financial performance and sustainability.