Badger Meter Inc (BMI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.87 | 4.06 | 4.38 | 4.51 | 4.51 |
| Receivables turnover | 8.47 | 7.39 | 7.67 | 6.90 | 6.92 |
| Payables turnover | 7.26 | 6.82 | 10.43 | 10.53 | 11.73 |
| Working capital turnover | 2.28 | 2.38 | 2.82 | 2.73 | 2.97 |
Badger Meter Inc.'s activity ratios provide insights into the efficiency of the company's operations and management of its resources over the years.
1. Inventory Turnover:
- The inventory turnover has slightly decreased over the past five years, from 3.19 in 2019 to 2.78 in 2023. This indicates that the company is selling its inventory less frequently, which could suggest potential issues with sales and production processes.
2. Receivables Turnover:
- The receivables turnover has shown an overall increasing trend, from 6.92 in 2019 to 8.43 in 2023. This suggests that the company is collecting its receivables more efficiently over time, potentially improving its cash flow and reducing the risk of bad debts.
3. Payables Turnover:
- The payables turnover ratio fluctuated over the years, with a notable decrease in 2021 followed by an increase in 2023. The lower ratio in 2021 could indicate that Badger Meter Inc. took longer to pay its suppliers, while the increase in 2023 suggests a potential improvement in managing payables.
4. Working Capital Turnover:
- The working capital turnover ratio has generally decreased over the past five years, from 2.97 in 2019 to 2.27 in 2023. This indicates that the company's efficiency in generating revenue relative to its working capital has declined, which could raise concerns about the effective utilization of resources.
In conclusion, while Badger Meter Inc. has seen improvements in receivables turnover, it may need to address the decreasing inventory turnover and working capital turnover ratios to enhance operational efficiency and maximize profitability in the future.
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 | 94.41 | 89.85 | 83.30 | 81.01 | 80.91 |
| Days of sales outstanding (DSO) | days | 43.07 | 49.42 | 47.59 | 52.92 | 52.78 |
| Number of days of payables | days | 50.26 | 53.56 | 35.00 | 34.68 | 31.12 |
Activity ratios provide insight into how efficiently a company manages its assets and operating cycle. Let's analyze the activity ratios of Badger Meter Inc. based on the provided data:
1. Days of Inventory on Hand (DOH):
- The trend for Days of Inventory on Hand shows an increasing pattern over the past five years, indicating that the company is holding inventory for longer periods before it is sold.
- A higher DOH may suggest inefficient inventory management, potential obsolescence, or overstocking, which can tie up capital and lead to increased holding costs.
2. Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding ratio reveals the average number of days it takes for Badger Meter Inc. to collect its accounts receivable.
- A decreasing trend in DSO over the years indicates an improvement in the company's collection efficiency, as it is collecting payment from customers more quickly.
3. Number of Days of Payables:
- This ratio measures how long it takes for Badger Meter Inc. to pay its creditors.
- The increasing trend in the Number of Days of Payables indicates that the company is taking longer to pay its suppliers, which can be seen as a positive sign from a working capital management perspective as it implies better cash flow management.
In summary, while Badger Meter Inc. has seen an increase in Days of Inventory on Hand, the management of its Accounts Receivable and Payables has shown positive trends. It is important for the company to evaluate its inventory management practices to optimize working capital utilization and ensure efficient operations.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 9.58 | 7.70 | 6.47 | 5.14 | 4.95 |
| Total asset turnover | 0.99 | 0.94 | 0.95 | 0.90 | 1.01 |
Badger Meter Inc.'s long-term activity ratios reflect the company's efficiency in utilizing its assets to generate sales over the past five years.
The fixed asset turnover ratio has shown a consistent upward trend, increasing from 4.95 in 2019 to 9.52 in 2023. This indicates that the company is generating more sales relative to its investment in fixed assets, such as property, plant, and equipment. A higher fixed asset turnover ratio suggests that Badger Meter Inc. is effectively utilizing its long-term assets to drive revenue growth.
On the other hand, the total asset turnover ratio has fluctuated over the same period, with a peak of 1.01 in 2019 and a low of 0.91 in 2020. In recent years, the total asset turnover ratio has ranged between 0.94 and 0.98. This ratio measures the company's ability to generate sales in relation to its total assets, including both short-term and long-term assets. While the fluctuations may indicate some variability in asset utilization efficiency, the ratios generally suggest a stable performance in converting assets into revenue.
Overall, the upward trend in fixed asset turnover and relatively stable total asset turnover ratios indicate that Badger Meter Inc. has been effectively managing its long-term assets to drive sales growth, reflecting operational efficiency and potential for long-term sustainability.