Acuity Brands Inc (AYI)
Working capital turnover
| Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 3,913,100 | 3,981,400 | 3,461,000 | 3,326,300 | 3,672,700 |
| Total current assets | US$ in thousands | 1,395,200 | 1,466,000 | 1,544,300 | 1,439,700 | 1,441,800 |
| Total current liabilities | US$ in thousands | 595,400 | 733,600 | 692,200 | 617,600 | 596,100 |
| Working capital turnover | 4.89 | 5.44 | 4.06 | 4.05 | 4.34 |
August 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $3,913,100K ÷ ($1,395,200K – $595,400K)
= 4.89
The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales revenue. A higher ratio indicates better utilization of working capital.
Looking at the data for Acuity Brands, Inc., we can see that the working capital turnover has fluctuated over the past five years. In 2023, the ratio stood at 4.94, showing a decrease from 5.47 in 2022. This indicates a potential decrease in the company's ability to efficiently convert its working capital into sales.
Comparing the 2023 ratio to previous years, it is lower than the 2022 and 2019 ratios, but higher than the 2021 and 2020 ratios. This suggests that Acuity Brands, Inc. has experienced variations in its working capital efficiency over the years, with a noticeable decrease in 2023.
It's important to note that a declining working capital turnover could be attributed to an increase in working capital relative to sales, which may indicate inefficiencies in managing inventory, receivables, or payables. Alternatively, it could be a result of declining sales without a corresponding decrease in working capital. Further analysis of the company's working capital components and sales trends would provide a clearer understanding of the factors driving this ratio.
In conclusion, the declining trend in Acuity Brands, Inc.'s working capital turnover from 2022 to 2023 warrants attention from stakeholders, as it suggests a potential inefficiency in utilizing working capital to generate sales. Management should carefully assess the company's working capital management practices to address any underlying issues and strive for improved efficiency in the future.
Peer comparison
Aug 31, 2023