Barnes Group Inc (B)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.90 | 4.41 | 4.82 | 4.46 | 5.66 |
| Receivables turnover | 3.92 | 4.27 | 4.74 | 4.40 | 4.19 |
| Payables turnover | 8.68 | 8.62 | 8.81 | 9.44 | 11.11 |
| Working capital turnover | 2.72 | 2.92 | 3.36 | 3.19 | 3.47 |
Barnes Group Inc.'s activity ratios provide insight into the efficiency of its inventory management, accounts receivable collection, accounts payable management, and overall working capital utilization over the past five years.
1. Inventory turnover: It decreased from 4.06 in 2019 to 2.76 in 2023, indicating a decline in the efficiency of inventory management. This suggests that the company is holding onto its inventory for a longer period compared to previous years.
2. Receivables turnover: The ratio fluctuated slightly but generally remained stable, ranging from 4.10 to 4.80 over the five-year period. This suggests that Barnes Group Inc. is collecting its accounts receivable at a relatively consistent pace.
3. Payables turnover: The ratio ranged from 5.79 to 7.97 over the five years, with a peak in 2019. A higher payables turnover ratio indicates that the company is taking longer to pay its suppliers, which could be beneficial for cash flow management.
4. Working capital turnover: This ratio also saw fluctuations but remained relatively consistent around the 3.00 mark. It indicates the efficiency with which Barnes Group Inc. is utilizing its working capital to generate sales.
Overall, while there have been some fluctuations in Barnes Group Inc.'s activity ratios over the past five years, the company generally maintained stable accounts receivable turnover and working capital turnover ratios. However, the decline in inventory turnover and slight increase in payables turnover may warrant further analysis to assess the impact on the company's operational efficiency and cash flow management.
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 | 93.51 | 82.77 | 75.72 | 81.86 | 64.48 |
| Days of sales outstanding (DSO) | days | 93.03 | 85.40 | 77.00 | 82.91 | 87.02 |
| Number of days of payables | days | 42.06 | 42.37 | 41.42 | 38.67 | 32.84 |
The activity ratios of Barnes Group Inc. provide insights into how efficiently the company manages its inventory, collects its receivables, and pays its payables.
1. Days of inventory on hand (DOH):
In 2023, Barnes Group Inc. had 132.14 days of inventory on hand, which indicates an increase compared to the previous year. This could suggest that the company is carrying more inventory relative to its sales, which may tie up working capital and increase holding costs. Overall, the rising trend in DOH is a sign that the company may need to focus on improving its inventory management efficiency.
2. Days of sales outstanding (DSO):
The DSO ratio reflects that Barnes Group Inc. takes an average of 89.04 days to collect its receivables in 2023. This figure increased compared to the previous year, indicating a lengthening of the collection period. A higher DSO can indicate potential issues with collecting payments from customers promptly, which may impact cash flow and liquidity. The company should implement strategies to accelerate its receivables collection.
3. Number of days of payables:
Barnes Group Inc. took 59.43 days to pay its payables in 2023, showing a decrease from the previous year. A lower number of days of payables may suggest that the company is paying its suppliers more quickly, which can be seen as a positive indication of strong supplier relationships. However, it is essential to balance timely payments with cash flow management to avoid any strains on liquidity.
In conclusion, while the company's efficiency in managing payables seems to have improved, areas of concern lie in the increasing days of inventory on hand and days of sales outstanding. Barnes Group Inc. should focus on optimizing inventory levels and accelerating receivables collection to enhance overall operational efficiency and financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.45 | 3.90 | 3.64 | 2.98 | 4.10 |
| Total asset turnover | 0.42 | 0.52 | 0.48 | 0.41 | 0.53 |
For Barnes Group Inc., the fixed asset turnover ratio has shown some fluctuations over the past five years. It decreased from 4.18 in 2019 to 3.03 in 2020, before recovering to 3.69 in 2021. However, it declined again to 3.94 in 2022 and further to 3.60 in 2023. This ratio indicates that Barnes Group Inc. generated $3.60 in sales for every dollar of fixed assets in 2023.
On the other hand, the total asset turnover ratio also exhibited variability during the same period. It decreased from 0.54 in 2019 to 0.42 in 2020, then increased to 0.49 in 2021, and further to 0.52 in 2022, before declining to 0.44 in 2023. This ratio signifies that Barnes Group Inc. generated $0.44 in sales for every dollar of total assets in 2023.
In general, the fixed asset turnover ratio indicates the efficiency with which the company utilizes its fixed assets to generate revenue, while the total asset turnover ratio reflects the overall efficiency of asset utilization in generating sales. The fluctuations seen in these ratios suggest varying levels of operational efficiency and asset utilization by Barnes Group Inc. over the past five years.