CTS Corporation (CTS)

Short-term

Turnover ratios

The activity ratios for CTS Corp. indicate how efficiently the company manages its assets and liabilities to generate sales and revenue. Here is a breakdown of each activity ratio:

1. Inventory turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory during a specific period.
- CTS Corp. showed a slight decrease in inventory turnover from 2022 to 2023, but overall the company has maintained a relatively stable level of inventory turnover.
- A higher inventory turnover ratio indicates that the company is efficiently managing its inventory levels and selling products quickly.

2. Receivables turnover:
- The receivables turnover ratio indicates how effectively a company collects on its credit sales.
- CTS Corp. saw an increase in receivables turnover from 2022 to 2023, indicating an improvement in the company's collection of receivables.
- A higher receivables turnover ratio suggests that the company has efficient credit policies and is collecting cash from customers in a timely manner.

3. Payables turnover:
- The payables turnover ratio measures how efficiently a company pays its suppliers.
- CTS Corp. experienced a significant increase in payables turnover from 2021 to 2023, indicating that the company is paying its suppliers more frequently.
- A higher payables turnover ratio could suggest that the company is managing its payables well and potentially taking advantage of payment terms offered by suppliers.

4. Working capital turnover:
- The working capital turnover ratio shows how efficiently a company utilizes its working capital to generate sales.
- CTS Corp. saw a slight decrease in working capital turnover from 2022 to 2023, but the company has maintained a relatively consistent level over the past five years.
- A higher working capital turnover ratio suggests that the company is effectively using its working capital to support its operations and drive revenue growth.

Overall, based on these activity ratios, CTS Corp. appears to be managing its assets and liabilities efficiently to support its sales and revenue generation. The company has shown stability and improvement in key areas such as inventory management, receivables collection, and payables turnover.

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Average number of days

Activity ratios provide insights into the efficiency of a company's operations in managing its assets and liabilities. Let's analyze the activity ratios of CTS Corp. based on the provided data:

1. Days of Inventory on Hand (DOH):
- The average number of days it takes for CTS Corp. to sell its inventory has been fluctuating over the last five years, ranging from 49.50 days in 2019 to 60.94 days in 2023.
- A higher DOH indicates that CTS Corp. is taking longer to sell its inventory, which may tie up company funds in unsold goods and potentially lead to higher holding costs.

2. Days of Sales Outstanding (DSO):
- CTS Corp.'s DSO, measuring how long it takes to collect revenue from sales, has also varied over the years, from 56.56 days in 2022 to 52.10 days in 2023.
- A lower DSO could suggest that CTS Corp. is efficient in collecting receivables, improving its cash flow and liquidity position.

3. Number of Days of Payables:
- The number of days CTS Corp. takes to pay its suppliers has ranged from 56.51 days in 2019 to 64.66 days in 2020.
- A higher number of days of payables may indicate that the company is taking longer to settle its obligations, potentially benefiting from extended payment terms but also risking strained supplier relationships if payments are delayed excessively.

In summary, an analysis of CTS Corp.'s activity ratios reveals fluctuations in inventory management, receivables collection, and payables management over the years. Monitoring and optimizing these ratios can help CTS Corp. enhance efficiency, cash flow, and relationships with suppliers and customers.

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Long-term

The fixed asset turnover ratio for CTS Corp. has shown a fluctuating trend over the past five years, ranging from 4.35 to 6.03. This ratio measures how efficiently the company is utilizing its fixed assets to generate sales, with a higher ratio indicating better efficiency. The slight fluctuations suggest some variability in the company's ability to generate sales from its fixed assets.

On the other hand, the total asset turnover ratio has been relatively stable, ranging from 0.68 to 0.78 over the same period. This ratio reflects the company's overall efficiency in generating sales from all its assets, including both fixed and current assets. A higher total asset turnover ratio indicates more efficient utilization of assets to generate sales.

In comparison, the fixed asset turnover ratio is consistently higher than the total asset turnover ratio, indicating that CTS Corp. is more efficient at generating sales from its fixed assets specifically, as opposed to its total assets. This could be indicative of the company's strategic focus on maximizing the productivity of its fixed assets in driving revenue growth.

Overall, while the company's fixed asset turnover has shown some fluctuations, both ratios suggest that CTS Corp. has been effectively managing its assets to generate sales and maximize efficiency over the past five years.