Acuity Brands Inc (AYI)

Short-term

Turnover ratios

Acuity Brands Inc's inventory turnover ratio has been showing consistent improvement over the past two years, indicating the company's ability to efficiently manage its inventory levels. The inventory turnover ratio has increased steadily from 7.28 in August 2022 to 9.61 in August 2023, suggesting that the company has been selling its inventory at a faster pace.

The receivables turnover ratio has also witnessed a positive trend, with the ratio increasing from 5.98 in August 2022 to 7.71 in February 2024. This improvement indicates that Acuity Brands Inc has been collecting its accounts receivable more efficiently over time.

On the other hand, the payables turnover ratio has fluctuated but generally remained stable over the same period. This ratio indicates the speed at which the company pays its suppliers and creditors. A higher payables turnover ratio means the company is taking longer to pay its bills, while a lower ratio indicates a quicker turnover of payables.

The working capital turnover ratio reflects how well Acuity Brands Inc is utilizing its working capital to generate sales revenue. The ratio has remained relatively steady, hovering around 4 to 5 over the past two years. A higher working capital turnover ratio suggests efficient use of working capital to generate sales, while a lower ratio may indicate inefficiencies in working capital management.

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Average number of days

Acuity Brands Inc's activity ratios reflect the efficiency with which the company manages its inventory, collects receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH):
- Acuity Brands' DOH has shown some fluctuations over the observed period, ranging from a low of 37.98 days to a high of 82.51 days.
- A decreasing trend in DOH indicates that the company is managing its inventory more efficiently and selling products at a faster rate.
- The increase in DOH in some periods may suggest overstocking or slower sales, which could tie up capital and increase holding costs.

2. Days of Sales Outstanding (DSO):
- The DSO of Acuity Brands has varied between 46.77 days and 61.08 days during the period under review.
- A lower DSO implies faster collection of receivables, which is beneficial in terms of cash flow management.
- However, an increasing trend in DSO could signal potential issues with credit policies or difficulties in collecting payments from customers.

3. Number of Days of Payables:
- Acuity Brands' days of payables have fluctuated between 29.44 days and 68.24 days across the analyzed period.
- A longer payable period benefits the company by allowing it more time to pay its suppliers and preserve cash.
- Nonetheless, an excessively prolonged payable period may strain supplier relationships or hint at financial distress if the company is stretching payments to unhealthy levels.

Overall, monitoring these activity ratios can provide insights into how efficiently Acuity Brands is managing its working capital and operating cycle, highlighting areas for potential improvement or concern.

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Long-term

Acuity Brands Inc has shown consistently strong performance in terms of its long-term activity ratios. The fixed asset turnover ratio has remained relatively stable over the period, ranging from 12.28 to 14.48, with an average of around 13.50. This indicates that the company generates revenue efficiently relative to its investment in fixed assets, with a higher ratio suggesting more effective utilization of fixed assets to generate sales.

On the other hand, the total asset turnover ratio shows a slight fluctuation but generally demonstrates a positive trend over time. The ratio has ranged from 0.94 to 1.21, with an average of approximately 1.08. This suggests that Acuity Brands Inc is efficient in generating sales revenue relative to its total assets, with a higher ratio indicating better asset utilization.

Overall, the consistently high fixed asset turnover and improving total asset turnover ratios reflect the company's ability to efficiently manage its assets and generate revenue. This indicates operational effectiveness and efficiency in utilizing both fixed and total assets to drive sales growth and profitability.