Brady Corporation (BRC)

Short-term

Turnover ratios

Inventory turnover measures how efficiently a company manages its inventory. Brady Corporation's inventory turnover has been increasing steadily over the past five years, from 4.07 in 2020 to 6.81 in 2024. This indicates that Brady is selling its inventory more quickly each year.

Receivables turnover reflects how efficiently a company collects its accounts receivable. Brady Corporation has maintained a relatively stable receivables turnover ratio, ranging from 6.71 to 7.40 over the same period. This suggests that Brady has been consistent in collecting its outstanding receivables.

Payables turnover measures how quickly a company pays its suppliers. Brady Corporation's payables turnover has fluctuated over the years but appears to have decreased from 13.24 in 2023 to 12.28 in 2024. A lower payables turnover ratio may indicate that Brady is taking longer to pay its suppliers.

Working capital turnover ratio shows how efficiently a company utilizes its working capital to generate sales. Brady Corporation's working capital turnover has fluctuated over the years but has generally shown an increasing trend, from 3.34 in 2020 to 4.00 in 2024. This suggests that Brady is using its working capital more effectively to generate revenue.

Overall, Brady Corporation's activity ratios indicate improvements in managing inventory and working capital efficiency, while maintaining stability in receivables turnover. However, the slight decrease in payables turnover may warrant further investigation into Brady's payment practices.

---

Average number of days

The activity ratios for Brady Corporation provide insights into how efficiently the company is managing its inventory, receivables, and payables over the past five years.

- Days of Inventory on Hand (DOH):
The trend for the Days of Inventory on Hand has been improving over the years, decreasing from 89.58 days in 2020 to 53.62 days in 2024. This indicates that Brady Corporation has been able to manage its inventory more efficiently, reducing the number of days it takes to sell its inventory.

- Days of Sales Outstanding (DSO):
The Days of Sales Outstanding remained relatively stable over the years, with a slight increase from 49.34 days in 2020 to 50.47 days in 2024. This suggests that the company has been maintaining a consistent collection period for its receivables.

- Number of Days of Payables:
The Number of Days of Payables has shown fluctuations over the years, with a significant decrease in 2021 followed by an increase in 2022 and 2023. However, in 2024, the days of payables decreased to 29.73 days. This implies that Brady Corporation has been managing its payables more effectively, potentially negotiating better terms with its suppliers.

Overall, these activity ratios indicate that Brady Corporation has been improving its efficiency in managing inventory, receivables, and payables, which can have positive implications for its working capital management and overall financial performance.

---

Long-term

The fixed asset turnover ratio for Brady Corporation has been gradually decreasing from 9.37 in 2023 to 6.85 in 2024, indicating a decline in the company's ability to generate sales from its fixed assets efficiently. This could be a cause for concern as it may suggest underutilization of fixed assets or decreasing sales relative to the investment in fixed assets.

In contrast, the total asset turnover ratio, which represents the company's ability to generate sales from all assets, has shown some fluctuations over the years but remained relatively stable overall, ranging from 0.83 in 2021 to 0.96 in 2023. The decrease to 0.89 in 2024 could indicate that the company is becoming less efficient in generating sales from its total assets.

Overall, the declining trend in fixed asset turnover coupled with fluctuations in total asset turnover may indicate inefficiencies in asset utilization and sales generation for Brady Corporation. Further analysis and investigation into the company's operational performance and asset management strategies are recommended to address these concerns and improve long-term activity ratios.