PC Connection Inc (CNXN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 28.59 | 22.21 | 14.45 | 13.60 | 17.97 |
| Receivables turnover | 4.17 | 4.29 | 4.68 | 4.42 | 3.82 |
| Payables turnover | 9.05 | 10.46 | 12.97 | 9.96 | 9.48 |
| Working capital turnover | 3.52 | 3.95 | 4.86 | 5.19 | 5.01 |
PC Connection Inc's inventory turnover ratio has shown a decreasing trend over the past five years, indicating a decline in the efficiency of managing inventory. However, the most recent ratio of 28.59 suggests a significant improvement in inventory turnover, which may signify better inventory management in the latest period.
The receivables turnover ratio has been relatively stable over the five-year period, ranging between 3.82 and 4.68. This consistency suggests that PC Connection Inc has been efficient in collecting receivables from customers during this time.
In terms of payables turnover, the company has experienced fluctuations in its ratio, with a peak in 2022 at 12.97 and a low in 2024 at 9.05. The lower payables turnover in 2024 may indicate that the company is taking longer to pay its suppliers, which could impact relationships and potential discounts.
The working capital turnover has also displayed a downward trend over the five-year period, indicating a decrease in the efficiency of utilizing working capital to generate sales. The decreasing ratio suggests that PC Connection Inc may need to optimize its working capital management to improve operational efficiency.
Overall, while the company has shown improvements in inventory turnover and maintained stability in receivables turnover, there are areas such as payables turnover and working capital turnover that may require attention to enhance efficiency and financial performance.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 12.77 | 16.44 | 25.25 | 26.85 | 20.32 |
| Days of sales outstanding (DSO) | days | 87.55 | 85.04 | 78.00 | 82.67 | 95.49 |
| Number of days of payables | days | 40.33 | 34.90 | 28.15 | 36.63 | 38.48 |
Based on the provided data for PC Connection Inc's activity ratios, we can analyze the trends in Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables over the five-year period from 2020 to 2024.
1. Days of Inventory on Hand (DOH):
- PC Connection Inc's DOH has shown a decreasing trend over the period, decreasing from 20.32 days in 2020 to 12.77 days in 2024. This suggests that the company has been more efficient in managing its inventory levels, reducing the number of days it takes to sell its inventory.
2. Days of Sales Outstanding (DSO):
- The DSO for PC Connection Inc fluctuated during the period, with a slight decrease from 95.49 days in 2020 to 87.55 days in 2024. This indicates that the company has been collecting its accounts receivable more quickly over time, although there was a slight increase in 2023.
3. Number of Days of Payables:
- PC Connection Inc's payables period has also fluctuated, with a decrease from 38.48 days in 2020 to 28.15 days in 2022 before increasing to 40.33 days in 2024. This implies that the company has been taking more time to pay its suppliers in certain years, which could impact its relationships with vendors.
Overall, the trend in these activity ratios suggests that PC Connection Inc has been improving its efficiency in managing inventory and collecting receivables, but there have been fluctuations in how quickly it pays its suppliers. It's important for the company to strike a balance between these three aspects to optimize its working capital management and overall financial health.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 53.35 | 50.30 | 52.81 | 47.41 | 42.09 |
| Total asset turnover | 2.16 | 2.40 | 2.84 | 2.67 | 2.55 |
Long-term activity ratios provide insights into how efficiently a company is utilizing its assets to generate sales. In the case of PC Connection Inc, the fixed asset turnover ratio has shown a positive trend over the years, increasing from 42.09 in 2020 to 53.35 in 2024. This indicates that the company is generating more sales revenue relative to its investment in fixed assets.
On the other hand, the total asset turnover ratio has been somewhat volatile, decreasing from 2.55 in 2020 to 2.16 in 2024. This suggests that PC Connection Inc may be experiencing challenges in generating sales revenue in relation to its total assets. It is important for the company to closely monitor this ratio to ensure optimal asset utilization and efficiency in its operations.
Overall, while the fixed asset turnover ratio of PC Connection Inc has shown improvement, the fluctuation in the total asset turnover ratio may require further analysis and strategic decisions to enhance asset utilization and overall efficiency in the long term.