Cintas Corporation (CTAS)

Short-term

Turnover ratios

The activity ratios of Cintas Corporation provide insights into how efficiently the company manages its resources and operations.

1. Inventory turnover: Cintas Corporation's inventory turnover has shown a generally increasing trend over the periods analyzed. This indicates that the company is selling its inventory at a faster rate. A higher inventory turnover ratio suggests effective inventory management and optimal stock levels.

2. Receivables turnover: Cintas Corporation's receivables turnover remains relatively stable over time, indicating that the company efficiently collects outstanding receivables from customers. A consistent receivables turnover ratio reflects effective credit and collection policies.

3. Payables turnover: The payables turnover ratio of Cintas Corporation has fluctuated but generally remained at a moderate level. A higher payables turnover indicates that the company pays its suppliers more quickly, which may help maintain good relationships with vendors.

4. Working capital turnover: The working capital turnover ratio of Cintas Corporation has varied significantly, with some periods showing unusually high values. Fluctuations in working capital turnover may suggest changes in the company's operating cycle or business activities.

Overall, Cintas Corporation's activity ratios demonstrate a level of efficiency in managing inventory, receivables, payables, and working capital. The company's ability to balance these factors efficiently is crucial for sustainable operations and financial performance.

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Average number of days

Days of inventory on hand (DOH) for Cintas Corporation have generally been in the range of 50 to 80 days over the past few years, indicating the company's ability to efficiently manage its inventory levels. The decreasing trend in inventory days from around 80 days to below 40 days in recent periods suggests a more effective inventory management strategy, potentially resulting in lower inventory carrying costs and improved cash flow.

Days of sales outstanding (DSO) have ranged from approximately 45 to 55 days over the same period, reflecting how long it takes the company to collect revenue from its customers. The stable DSO trend signifies that the company has been maintaining relatively consistent payment terms with its customers, ensuring a steady inflow of cash from sales.

Number of days of payables for Cintas Corporation has shown a declining trend from around 50 days to below 30 days in recent periods. This indicates that the company has been paying its suppliers more quickly over time, potentially strengthening its relationships with vendors by ensuring timely payments. However, a significant decrease in payables days could also indicate a potential strain on the company's working capital position.

Overall, the activity ratios suggest that Cintas Corporation has been effectively managing its inventory, accounts receivable, and accounts payable to optimize its cash conversion cycle and maintain a healthy liquidity position.

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Long-term

Cintas Corporation's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into how efficiently the company is utilizing its assets to generate revenue.

Fixed asset turnover, which measures the company's ability to generate sales from its fixed assets, has been relatively stable over the periods analyzed, ranging from 4.93 to 6.27. This indicates that Cintas is effectively utilizing its fixed assets to drive sales, with a higher turnover ratio generally considered more favorable as it suggests that the company is efficiently using its assets to generate revenue.

Total asset turnover, on the other hand, measures how well the company is utilizing all its assets (both fixed and current) to generate sales. Cintas' total asset turnover has shown a minor fluctuation over the periods analyzed, generally hovering around 1. This suggests that the company is managing its total assets efficiently to generate sales, with a ratio above 1 indicating that the company is generating more in sales compared to the value of its total assets.

Overall, the stable and relatively high fixed asset turnover ratios, along with consistent total asset turnover ratios around 1, indicate that Cintas Corporation is effectively managing its assets to drive sales and generate revenue efficiently.