Donaldson Company Inc (DCI)
Activity ratios
Short-term
Turnover ratios
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.85 | 5.43 | 4.46 | 4.90 | 5.30 |
| Receivables turnover | 5.70 | 5.72 | 5.36 | 5.16 | 5.67 |
| Payables turnover | 6.09 | 7.45 | 6.62 | 6.40 | 9.11 |
| Working capital turnover | 5.47 | 6.48 | 4.26 | 4.48 | 3.74 |
Donaldson Company Inc's activity ratios indicate the efficiency of its operations in managing inventory, receivables, payables, and working capital.
1. Inventory turnover: The company's inventory turnover has shown a decreasing trend over the past five years, from 5.30 in 2020 to 4.85 in 2024. This suggests that the company is taking longer to sell its inventory, which may indicate potential issues with inventory management or slowing sales.
2. Receivables turnover: The receivables turnover has remained relatively stable over the years, ranging from 5.16 in 2021 to 5.72 in 2023. This indicates that the company's accounts receivable are being converted into cash at a consistent pace.
3. Payables turnover: There is a fluctuating trend in the payables turnover ratio, ranging from 6.40 in 2021 to 9.11 in 2020. A higher payables turnover ratio may suggest that the company is taking longer to pay its suppliers, potentially indicating favorable payment terms or a need for better cash management.
4. Working capital turnover: The working capital turnover has shown variability over the years, with a peak of 6.48 in 2023 and a low of 3.74 in 2020. This ratio reflects how effectively the company is utilizing its working capital to generate sales. The declining trend in recent years may indicate potential inefficiencies in working capital management.
Overall, while the company's receivables turnover remains stable, there are areas, such as inventory turnover and working capital turnover, that may require closer monitoring to improve operational efficiency and cash flow management.
Average number of days
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 75.26 | 67.22 | 81.89 | 74.56 | 68.87 |
| Days of sales outstanding (DSO) | days | 64.09 | 63.80 | 68.06 | 70.69 | 64.37 |
| Number of days of payables | days | 59.90 | 49.02 | 55.18 | 56.99 | 40.06 |
Donaldson Company 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) measures how long inventory sits on the shelves before being sold. The increasing trend in DOH from 2020 to 2022 suggests a potential issue of overstocking or slower inventory turnover during those years. However, there was a slight improvement in 2023, followed by a further increase in 2024. This indicates that the company may be carrying excess inventory, which ties up capital and may lead to higher storage costs.
2. Days of sales outstanding (DSO) reflects the average number of days it takes the company to collect payment after a sale. The trend in DSO has been relatively stable, with slight fluctuations over the years. The DSO was lower in 2024 compared to the previous year, which is a positive sign of efficient accounts receivable management and timely collection of payments from customers.
3. Number of days of payables measures how long it takes the company to pay its suppliers. The trend in this ratio shows an increasing number of days over the years, indicating that the company is taking longer to pay its suppliers. This might be a strategic move to optimize cash flow, but it could also potentially strain supplier relationships if payment terms are extended too far.
Overall, Donaldson Company Inc should continue to monitor its activity ratios to ensure optimal levels of inventory, accounts receivable, and accounts payable management for improved efficiency and financial performance.
Long-term
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.56 | 5.25 | 5.56 | 4.62 | 4.09 |
| Total asset turnover | 1.23 | 1.24 | 1.27 | 1.19 | 1.15 |
The fixed asset turnover ratio for Donaldson Company Inc has shown a consistent upward trend over the past five years, indicating that the company has been more efficient in generating sales from its fixed assets. This improvement suggests that Donaldson has been able to utilize its fixed assets effectively to generate revenue.
On the other hand, the total asset turnover ratio has been relatively stable over the same period. While not showing as significant an increase as the fixed asset turnover ratio, the total asset turnover ratio indicates that the company has been able to generate reasonable sales relative to its total assets.
Overall, these long-term activity ratios suggest that Donaldson Company Inc has been effective in managing and utilizing its assets to generate sales and should continue to focus on improving efficiency in asset utilization to drive profitability.