Brady Corporation (BRC)

Short-term

Turnover ratios

The activity ratios for Brady Corporation over the period from July 31, 2021, to July 31, 2025, reflect varied patterns in operational efficiency and asset utilization.

Inventory Turnover:
The inventory turnover ratio indicates how many times inventory is sold and replaced within a fiscal year. From 2021 to 2024, the ratio shows a gradual decline: 4.29 in 2021, decreasing to 3.53 in 2022, then slightly rising to 3.81 by 2023, and reaching 4.28 in 2024. This trend suggests a modest reduction in inventory management efficiency initially, followed by an improvement approaching 2024, signifying more effective inventory utilization. However, the ratio for 2025 exhibits an anomalously high value of 82.30, far exceeding previous years, which likely indicates a data error or reporting inconsistency rather than a genuine operational metric.

Receivables Turnover:
This ratio measures the efficiency in collecting receivables, with higher values indicating faster collection periods. The data shows a slight upward trend from 6.71 in 2021 to 7.22 in 2023, stabilizing around 7.23 in 2024, before decreasing to 6.53 in 2025. The stabilization in the early years suggests consistent receivables management, while the decline in 2025 points to a potential slowdown in collection efficiency, possibly due to changing credit policies or customer payment behavior.

Payables Turnover:
This metric evaluates how quickly a company pays its suppliers. The ratio increased from 7.10 in 2021 to 8.45 in 2023, indicating a trend toward earlier payment or improved payables management. In 2024, the ratio decreased slightly to 7.72, then further declined to 7.17 in 2025, implying a potential tightening in payment cycles or a shift in cash flow management. The downward trend in the later years suggests a move towards slower payments relative to purchases, which could impact supplier relationships or cash management strategies.

Working Capital Turnover:
This ratio illustrates how effectively the company uses its working capital to generate sales. It decreased over the examined period from 5.52 in 2021 to 4.00 in 2024, with data for 2025 unavailable. The declining trend indicates decreasing efficiency in utilizing working capital to support sales, which could suggest increased investments in assets, reduced sales activity, or operational inefficiencies.

Summary:
Overall, Brady Corporation's activity ratios depict a picture of stable receivables management, fluctuating inventory management with recent improvement, and evolving payables practices, with a notable decline in working capital efficiency over the period. The anomalous inventory turnover figure in 2025 warrants further investigation to confirm data accuracy. The observed trends provide insights into operational adjustments and financial strategies that may impact overall performance and liquidity management.

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Average number of days

The analysis of Brady Corporation's activity ratios over the period from July 31, 2021, to July 31, 2025, reveals noteworthy trends and shifts in operational efficiency and working capital management.

Days of Inventory on Hand (DOH):
The DOH metric experienced an increase from 85.18 days in 2021 to a peak of 103.44 days in 2022, indicating a period of higher inventory levels relative to sales. This suggests a potential buildup of inventory, possibly due to inventory management strategies or anticipatory stockpiling in response to market conditions. Subsequently, DOH decreased to 95.81 days in 2023 and further to 85.30 days in 2024, reflecting an improvement in inventory turnover and more efficient inventory management. The most notable shift occurs in 2025, with DOH plummeting to 4.44 days, indicating an exceptionally rapid inventory turnover, potentially due to significant changes in operations, inventory policies, or reporting adjustments.

Days of Sales Outstanding (DSO):
The DSO figure shows relatively stable, though slightly fluctuating, receivables collection periods. It decreased marginally from 54.39 days in 2021 to 50.54 days in 2023, suggesting slight improvements in receivables management and collection efficiency. In 2024, DSO remains stable at around 50.47 days, but a notable increase to 55.93 days occurs in 2025, implying a lengthening of the receivables collection cycle or changes in credit policy or customer payment behavior.

Number of Days of Payables:
The payables period decreased from 51.41 days in 2021 to 43.21 days in 2023, indicating an improvement in the efficiency of paying suppliers or a more aggressive payables management. The period then extended slightly to 47.30 days in 2024, before increasing to 50.92 days in 2025. This upward trend suggests a strategic delay in payments or a negotiated extension of payment terms, potentially to optimize cash flow or due to shifting supplier relationships.

Overall Observation:
Across the analyzed period, Brady Corporation exhibits a trend of improving inventory turnover and receivables collection efficiencies, except for the significant reduction in inventory days in 2025, which may warrant further investigation to understand the underlying causes. The increasing trend in the days of payables towards 2025 indicates a possible shift in working capital strategy aimed at extending payment periods. The combined effects of these factors point to efforts to optimize liquidity and operational efficiency, with notable changes occurring in 2024 and 2025 that suggest strategic adjustments in inventory management, receivables collection, and payables payments.

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Long-term

The analysis of Brady Corporation's long-term activity ratios reveals notable trends over the periods examined. The Fixed Asset Turnover ratio, which measures how effectively the company utilizes its fixed assets to generate sales, exhibited an increase from 7.00 on July 31, 2021, to 9.33 on July 31, 2022, and further to 9.37 on July 31, 2023. This upward trajectory indicates a significant improvement in the utilization efficiency of fixed assets during this period. However, a decline is observed in the ratio to 5.73 as of July 31, 2024, suggesting a reduction in the effectiveness of fixed asset utilization, potentially due to asset underperformance or increased capital expenditures not yet translating into sales.

In contrast, the Total Asset Turnover ratio, which assesses overall asset efficiency in generating sales, showed a steady increase from 0.83 on July 31, 2021, to 0.95 on July 31, 2022, and slightly to 0.96 on July 31, 2023. This indicates an ongoing enhancement in the company's overall asset utilization efficiency. However, a decline is observed in the following year to 0.89 as of July 31, 2024.

A significant anomaly appears in the data for July 31, 2025, where the total asset turnover ratio drastically spikes to 74.74. This extraordinary value suggests either a data recording error or an extraordinary event significantly skewing the ratio, as such a figure is not typical in standard contexts and indicates a possible misstatement or a one-time sale or asset reclassification.

Overall, the company's fixed asset efficiency improved markedly up to 2023 before declining, possibly reflecting changes in asset management or utilization challenges. Meanwhile, the overall asset turnover ratio demonstrated consistent improvement until 2023, with a notable abnormal surge in 2025 that warrants further scrutiny for data accuracy and context.