Brady Corporation (BRC)

Short-term

Turnover ratios

The activity ratios of Brady Corporation over the observed period reveal insights into the company's operational efficiency and asset management strategies.

Starting with inventory turnover, there has been a declining trend from a high of 4.57 on October 31, 2020, to a low of approximately 3.43 as of October 31, 2022. Post this period, there has been a gradual recovery, reaching values close to 4.29 in April 2024 before stabilizing around 3.80 to 4.00 up to October 2025. This pattern suggests that inventory management may have faced challenges around 2021 but has since improved, indicating more efficient inventory utilization and turnover rates.

Receivables turnover ratios have generally exhibited stability with slight positive fluctuations, moving from about 6.84 in October 2020 to over 7.45 in October 2023. The increases in receivables turnover imply enhancements in the collection process or credit policy adjustments, contributing to quicker cash inflows from customers and better management of accounts receivable.

Payables turnover ratios show a relatively steady pattern, fluctuating between roughly 6.93 and 8.90. A slight decline is noticeable towards the end of the observed period, notably dropping below 8 in 2024 and further to approximately 7.17 in July 2025. This variation could indicate changes in the company's credit terms with suppliers or modifications in payment strategies, affecting the speed at which Brady Corporation settles its payables.

The working capital turnover ratio demonstrates variability, with a noticeable peak around July 2021 at 5.52, then fluctuating between approximately 4.67 and 5.59 in subsequent periods. In particular, a decrease to 4.00 is observed in July 2024, followed by an uptick to over 5.45 by October 2024. These movements suggest occasional shifts in working capital efficiency, possibly reflecting changes in sales volume, receivables, inventories, or payables management.

In summary, Brady Corporation’s activity ratios indicate a period of initial operational challenges, especially in inventory management, followed by gradual improvement. The receivables turnover reflects effective credit and collection policies, while payables management and working capital efficiency have experienced some fluctuations. These ratios collectively provide an overview of the company's efforts to optimize asset utilization and improve operational performance over the analyzed timeframe.

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Average number of days

The activity ratios for Brady Corporation, specifically Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Days of Payables, reveal trends in operational efficiency over the analyzed period.

Days of Inventory on Hand (DOH):
The DOH measures the average number of days inventory remains in stock before being sold. The period from October 2020 to July 2021 saw a gradual increase from approximately 79.93 days to a peak of 103.44 days, indicating a lengthening of inventory holding periods. Post-July 2021, there is a noticeable rising trend, reaching around 106.40 days by October 2022, which could suggest buildup of inventory or slower turnover. Subsequently, a decline is observed, with DOH decreasing to approximately 85.10 days by April 2024 and stabilizing around 91.27 to 95.80 days through the remaining periods. This reduction might reflect improved inventory management and turnover efficiency after the peak years.

Days of Sales Outstanding (DSO):
DSO indicates the average days taken to collect receivables from customers. Initially, from October 2020 to April 2022, DSO remained relatively stable around 53 days, with minor fluctuations. Starting in mid-2022, there is a slight decline to approximately 50 days, maintaining consistency through 2023. However, by October 2024, DSO exhibits an upward trend, reaching about 57.46 days, signaling a potential increase in collection periods or shifts in credit policy. The data from 2025 shows a somewhat fluctuating but generally higher DSO, nearing 56 days, which could suggest effects of altered credit terms or customer payment behaviors.

Number of Days of Payables:
The payables cycle, averaging around 41 to 47 days from October 2020 through mid-2023, reflects Brady Corporation’s payment practices to suppliers. Notably, from July 2024 onward, there is an increasing tendency, with the days of payables rising to over 52 days by October 2024 and approximately 50.92 days as of July 2025. This trend indicates a potential extension of payment periods, possibly as part of working capital management strategies or supplier negotiations.

Overall Interpretation:
The company's inventory days peaked between mid-2021 and late 2022, then improved through 2023 and into 2024. During the same period, receivables collection times stabilized but showed signs of lengthening again by late 2024. Meanwhile, the payables period increased notably after mid-2024. These combined trends suggest Brady Corporation experienced a phase of inventory buildup and slower receivables collection, followed by a broader effort to extend payables, potentially to manage liquidity or optimize working capital. Continuous monitoring of these ratios is necessary to assess the efficiency of operational and financial management strategies over time.

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Long-term

The long-term activity ratios for Brady Corporation, specifically the Fixed Asset Turnover and Total Asset Turnover ratios, indicate varying levels of asset utilization efficiency over the analyzed periods.

The Fixed Asset Turnover ratio exhibits fluctuations throughout the timeline. It peaked at 10.27 on April 30, 2022, reflecting an optimal utilization of fixed assets in generating sales during that period. Conversely, the ratio declined to its lowest point of 5.69 as of October 31, 2024. Prior to this decline, the ratio displayed a generally stable trend with some minor oscillations, suggesting consistency in fixed asset efficiency with occasional periods of reduced utilization. The decline towards October 2024 may imply increased investment in fixed assets, decreased sales efficiency, or both.

The Total Asset Turnover ratio remained relatively stable over the period, generally hovering around 0.83 to 0.97. It reached a high of 0.97 on October 31, 2023, indicating a very efficient utilization of total assets in generating sales during that time frame. In contrast, the lowest observed value was 0.85 on October 31, 2024, aligning with the decline observed in the Fixed Asset Turnover ratio during the same period. Overall, the ratios remain within a narrow range, reflecting steady operational efficiency, albeit with some fluctuation.

In summary, Brady Corporation demonstrated periods of strong asset utilization efficiency, particularly in spring 2022 and late 2023, while recent data suggests a decline in asset turnover efficiency, especially in late 2024. These shifts may be attributable to changes in asset investment levels, sales performance, or operational adjustments. The stability in total asset turnover indicates consistent overall management of assets in generating sales, despite fluctuations in fixed asset efficiency.