Digi International Inc (DGII)

Short-term

Turnover ratios

Inventory turnover ratios provide insight into how efficiently the company manages its inventory. Digi International Inc's inventory turnover has been improving steadily over the last five years, reaching 3.26 in 2024 from 2.62 in 2020. This indicates that the company is selling its inventory more frequently, which is a positive sign of effective inventory management.

Receivables turnover ratios reveal how quickly the company collects outstanding receivables. Digi International Inc's receivables turnover has fluctuated over the years but has generally remained at healthy levels. The ratio decreased from 7.94 in 2023 to 6.09 in 2024, suggesting a slight slowdown in receivables turnover.

Payables turnover ratios reflect how long it takes the company to pay its suppliers. Digi International Inc's payables turnover has shown variability over the past five years, with a significant increase from 2023 to 2024. The ratio improved from 11.23 in 2023 to 7.33 in 2024, indicating that the company is paying its suppliers more promptly.

Working capital turnover ratios measure the efficiency of using working capital to generate sales. Digi International Inc's working capital turnover has generally improved over the years, reaching 6.51 in 2024 from 2.57 in 2020. This suggests that the company is managing its working capital more effectively to generate sales.

In summary, Digi International Inc has shown positive trends in its activity ratios, with improvements in inventory turnover and working capital turnover, despite fluctuations in receivables and payables turnovers. These improvements indicate enhanced efficiency in managing inventory and working capital, which can positively impact the company's overall financial performance.

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Average number of days

Activity ratios such as Days of inventory on hand (DOH), Days of sales outstanding (DSO), and Number of days of payables provide insights into how efficiently Digi International Inc manages its inventory, collects receivables, and pays its suppliers.

1. Days of inventory on hand (DOH):
- The DOH has decreased from 155.44 days in 2022 to 111.84 days in 2024.
- This indicates that Digi International has improved its inventory management efficiency by reducing the number of days it takes to sell its inventory.
- A lower DOH is generally favorable as it signifies faster inventory turnover and potentially lower holding costs.

2. Days of sales outstanding (DSO):
- The DSO has fluctuated over the years but has shown a decreasing trend overall from 77.41 days in 2020 to 59.94 days in 2024.
- A lower DSO indicates that Digi International is collecting its accounts receivable more quickly, improving its cash flow.
- The decreasing trend suggests that the company is becoming more efficient in collecting payments from its customers.

3. Number of days of payables:
- The number of days of payables has fluctuated over the years, with a notable increase from 32.49 days in 2023 to 49.80 days in 2024.
- A higher number of days of payables may indicate that Digi International is taking longer to pay its suppliers, which can sometimes be a strategy to manage cash flow.
- While longer payables may improve liquidity in the short term, it could potentially strain relationships with suppliers if not managed carefully.

In summary, the trend of decreasing DOH and DSO along with the increase in the number of days of payables suggest that Digi International is improving its inventory management and accounts receivable collection efficiency while potentially managing its cash flow by extending payment periods to suppliers.

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Long-term

Digi International Inc's long-term activity ratios reflect the company's efficiency in utilizing its fixed assets and total assets over the past five years.

1. Fixed Asset Turnover: The fixed asset turnover ratio measures how efficiently a company generates revenues from its investment in fixed assets. Digi International Inc's fixed asset turnover has shown a declining trend over the period, decreasing from 25.44 in 2021 to 12.15 in 2024. This suggests that the company's fixed assets are generating less revenue per dollar invested, indicating a potential decrease in operational efficiency in utilizing these assets.

2. Total Asset Turnover: The total asset turnover ratio measures how effectively a company generates revenue from its total assets. Digi International Inc's total asset turnover ratio has fluctuated over the years, with a peak of 0.53 in 2020, followed by a decline to 0.45 in 2022, and a slight rebound to 0.52 in 2024. This indicates that the company has had varying levels of success in generating sales relative to its total asset base.

Overall, the declining trend in fixed asset turnover and the fluctuating total asset turnover suggest that Digi International Inc may need to focus on improving its asset utilization efficiency to enhance its long-term operational performance and profitability. Further analysis and comparison with industry peers could provide additional insights into the company's competitive position and potential areas for improvement.