Cavco Industries Inc (CVCO)

Short-term

Turnover ratios

The activity ratios of Cavco Industries Inc provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital.

1. Inventory turnover:
The inventory turnover ratio measures how many times a company sells and replaces its inventory during a specific period. Cavco Industries Inc's inventory turnover has been declining over the past five years, from 7.32 in 2020 to 5.67 in 2024. This indicates that the company is selling its inventory at a slightly slower pace in recent years.

2. Receivables turnover:
The receivables turnover ratio reflects how well a company collects its outstanding receivables from customers. Cavco Industries Inc's receivables turnover has shown an increasing trend over the period, with a significant spike in 2020 followed by a more stable growth. This suggests that the company has been more effective in collecting payments from its customers in recent years.

3. Payables turnover:
The payables turnover ratio measures how quickly a company pays its suppliers. Cavco Industries Inc's payables turnover has fluctuated over the years but has generally been on a downward trend since 2020. A decreasing payables turnover ratio can indicate that the company is taking longer to pay its suppliers, potentially affecting supplier relationships.

4. Working capital turnover:
The working capital turnover ratio indicates how efficiently a company utilizes its working capital to generate revenue. Cavco Industries Inc's working capital turnover has varied over the years, with a noticeable decrease in 2021 before rising again in subsequent years. A higher working capital turnover ratio reflects better efficiency in generating sales relative to the amount of working capital employed.

Overall, the analysis of Cavco Industries Inc's activity ratios highlights areas where the company has improved efficiency, such as in receivables turnover. However, it also signals potential challenges, such as declining inventory turnover and payables turnover, which may require further attention to optimize operations and financial performance.

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Average number of days

Cavco Industries Inc's activity ratios indicate the efficiency of its inventory management, accounts receivable collection, and accounts payable management over the past five years.

1. Days of Inventory on Hand (DOH): The company's inventory turnover has been relatively stable, ranging from 49.85 days in 2020 to 73.09 days in 2022. A lower DOH indicates that the company is selling its inventory more quickly, which can improve cash flow and reduce carrying costs. The fluctuation in DOH suggests some variability in inventory management efficiency.

2. Days of Sales Outstanding (DSO): Cavco Industries has shown variability in its DSO, ranging from 14.98 days in 2020 to 29.56 days in 2021. A lower DSO indicates faster collection of accounts receivable, which improves cash flow. The increase in DSO in 2021 suggests a potential issue with collecting payments from customers efficiently.

3. Number of Days of Payables: The company's payables period has seen some fluctuations but has generally remained within a relatively narrow range over the years. A higher number of days of payables allows the company to hold onto cash longer, improving liquidity. Cavco Industries' ability to manage its payables effectively can help support its working capital management.

In summary, Cavco Industries Inc has shown varying levels of efficiency in managing its inventory, accounts receivable, and accounts payable over the years. While there have been fluctuations in these activity ratios, overall performance appears to be relatively stable, with some room for improvement in accounts receivable collection efficiency based on the trends observed.

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Long-term

Cavco Industries Inc's long-term activity ratios indicate how efficiently the company is utilizing its assets to generate sales. The fixed asset turnover ratio has been consistently declining over the past five years, from 13.76 in 2020 to 8.01 in 2024. This suggests that the company is generating fewer sales per dollar of fixed assets invested over time.

On the other hand, the total asset turnover ratio has shown some fluctuations but has generally improved over the same period, with the highest ratio of 1.64 in 2023. This signifies that the company is generating more sales per dollar of total assets, indicating an improvement in overall asset utilization efficiency.

Overall, while the total asset turnover ratio indicates a positive trend, the decreasing trend in the fixed asset turnover ratio suggests potential inefficiencies in the utilization of fixed assets. Further analysis is recommended to identify the factors contributing to these trends and to evaluate the company's asset management strategies.