Acuity Brands Inc (AYI)
Activity ratios
Short-term
Turnover ratios
| Aug 31, 2024 | Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 8.60 | 9.61 | 7.29 | 4.98 | 6.01 |
| Receivables turnover | 6.81 | 7.05 | 5.98 | 6.05 | 6.65 |
| Payables turnover | 9.47 | 12.40 | 8.90 | 5.07 | 5.89 |
| Working capital turnover | 3.24 | 4.89 | 5.44 | 4.06 | 4.05 |
Acuity Brands Inc's activity ratios provide insights into the efficiency of its operations in managing inventory, receivables, payables, and working capital.
The inventory turnover ratio has fluctuated over the past five years, with a peak of 9.61 in 2023 and a low of 4.98 in 2021. This indicates that on average, the company has been able to turn over its inventory approximately 5 to 9 times each year, suggesting efficient management of inventory levels.
The receivables turnover ratio has shown relatively consistent performance, ranging from 5.98 to 7.05 over the same period. This implies that Acuity Brands Inc has been effective in collecting payments from customers, with an average of 6 to 7 times annually.
In terms of payables turnover, the company has managed to extend its payment periods to suppliers, as reflected in the increase from 5.07 in 2021 to 12.40 in 2023, before decreasing to 9.47 in 2024. This indicates the company's ability to efficiently manage its payables.
The working capital turnover has also varied over the years but generally indicates the company's ability to utilize its working capital efficiently to generate sales revenue. The ratios have been relatively stable, with a peak of 5.44 in 2022 and a low of 4.05 in 2020.
Overall, Acuity Brands Inc's activity ratios suggest that the company has been effectively managing its inventory, receivables, payables, and working capital to support its operational activities and generate revenue.
Average number of days
| Aug 31, 2024 | Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 42.42 | 37.98 | 50.09 | 73.28 | 60.73 |
| Days of sales outstanding (DSO) | days | 53.57 | 51.80 | 61.05 | 60.30 | 54.90 |
| Number of days of payables | days | 38.56 | 29.44 | 41.03 | 71.95 | 61.94 |
Acuity Brands Inc's activity ratios provide insights into the company's efficiency in managing various aspects of its operations.
1. Days of Inventory on Hand (DOH): This ratio indicates the average number of days it takes for the company to sell its inventory. A lower number is generally preferable as it suggests faster turnover and less holding cost. Acuity Brands Inc's DOH has fluctuated over the years, with improvements in 2023 and 2020 but increases in 2024 and 2021. The company should aim to monitor inventory levels closely to avoid overstocking or shortages.
2. Days of Sales Outstanding (DSO): DSO measures the average number of days it takes for the company to collect revenue from its sales. A lower DSO signifies quicker cash conversion and a more efficient accounts receivable process. Acuity Brands Inc's DSO has been relatively stable, hovering around 50-60 days range in the past five years. The company may want to review its credit policies to accelerate collections and improve cash flow.
3. Number of Days of Payables: This ratio reveals how long the company takes to pay its suppliers. A higher number of days indicates the company takes longer to settle its payables, potentially benefiting from better cash flow management. Acuity Brands Inc's payables period has shown variability, with decreases in 2023 and 2020 and increases in 2024 and 2021. The company should balance extending payment terms with maintaining good relationships with suppliers.
In summary, Acuity Brands Inc should continue monitoring and optimizing its activity ratios to enhance operational efficiency, cash flow management, and overall financial performance.
Long-term
| Aug 31, 2024 | Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 12.62 | 13.15 | 14.40 | 12.86 | 12.30 |
| Total asset turnover | 1.01 | 1.15 | 1.14 | 0.97 | 0.95 |
The fixed asset turnover ratio for Acuity Brands Inc has shown a decreasing trend over the five-year period from 2020 to 2024, indicating that the company generated less revenue per dollar of fixed assets invested in its operations. This could be a signal of inefficiency in utilizing its fixed assets to generate sales.
On the other hand, the total asset turnover ratio increased from 0.95 in 2020 to 1.01 in 2024, suggesting an improvement in the company's overall ability to generate sales relative to its total assets. This may indicate better efficiency in utilizing both fixed and current assets to generate revenue.
Overall, while the fixed asset turnover ratio decreased, the total asset turnover ratio improved, which could be a sign of operational improvements in utilizing the company's assets more effectively to generate sales. However, further analysis and comparison with industry benchmarks would provide a more conclusive assessment of Acuity Brands Inc's long-term activity ratios.