Digi International Inc (DGII)

Short-term

Turnover ratios

Based on the provided data, we can analyze the activity ratios of Digi International, Inc. for the last five years. Activity ratios provide insights into how efficiently a company is managing its resources and assets to generate sales. Let's analyze the inventory turnover, receivables turnover, payables turnover, and working capital turnover.

Inventory turnover:
The inventory turnover ratio measures how many times a company's inventory is sold and replaced over a period. Digi International, Inc.'s inventory turnover has varied over the past five years, ranging from 2.28 to 3.32. The 2023 figure of 2.54 indicates that the company's inventory turnover has increased slightly from the previous year, reflecting an improvement in the efficiency of inventory management.

Receivables turnover:
The receivables turnover ratio reflects the efficiency of a company in collecting credit sales from its customers. Digi International, Inc.'s receivables turnover has steadily increased from 4.51 in 2019 to 7.94 in 2023. This indicates that the company has been successful in collecting receivables from its customers more efficiently over the years.

Payables turnover:
The payables turnover ratio measures how quickly a company pays its suppliers. Digi International, Inc. has shown fluctuation in payables turnover over the years, with a significant increase in 2023 to 11.00 from 5.15 in 2022. This suggests that the company has been able to manage its payables more effectively in the most recent year.

Working capital turnover:
The working capital turnover ratio assesses how efficiently a company utilizes its working capital to generate sales. Digi International, Inc.'s working capital turnover has varied over the years, with a significant improvement in 2023 to 5.55 from 1.64 in 2021. This indicates that the company has been utilizing its working capital more efficiently to support its operations and sales.

In conclusion, the analysis of Digi International, Inc.'s activity ratios indicates that the company has shown improvements in managing its inventory, collecting receivables, and paying its suppliers more effectively. Additionally, the company has demonstrated enhanced efficiency in utilizing its working capital to generate sales, which bodes well for its overall operational and financial performance.

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Average number of days

To analyze the activity ratios of Digi International, Inc., we will focus on the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables. These ratios provide insight into the efficiency of inventory management, collection of receivables, and payment of payables.

1. Days of Inventory on Hand (DOH):
The DOH measures the average number of days it takes for the company to sell its inventory. A higher DOH indicates that the company is taking longer to turn its inventory into sales, which may tie up capital and increase holding costs. Conversely, a lower DOH suggests better inventory management and faster turnover.

Analysis:
- The DOH increased from 116.61 days in 2021 to 160.38 days in 2022, showing a significant decline in inventory turnover efficiency. However, in 2023, it decreased to 143.92 days, which is still higher than in 2021. This suggests that the company may be facing challenges in managing its inventory efficiently.

2. Days of Sales Outstanding (DSO):
The DSO measures the average number of days it takes for the company to collect payment from its customers. A higher DSO indicates slower collection of receivables, potentially impacting cash flow. Conversely, a decreasing trend in DSO suggests better credit management and efficient collection practices.

Analysis:
- The DSO decreased from 81.01 days in 2019 to 45.95 days in 2023, indicating an improvement in collecting receivables. This suggests that the company has been more effective in managing its accounts receivable and collecting payments from customers in a timely manner.

3. Number of Days of Payables:
This ratio measures the average number of days it takes for the company to pay its suppliers. A higher number of days of payables suggests that the company is taking longer to pay its suppliers, potentially indicating a strategy to preserve cash. However, excessively long payables periods may strain supplier relationships.

Analysis:
- The number of days of payables fluctuated over the years, with a peak of 78.31 days in 2020 and a low of 33.17 days in 2023. This fluctuation may indicate changes in the company's payment policies or relationships with suppliers.

In conclusion, the analysis of Digi International, Inc.'s activity ratios suggests that the company has faced challenges in managing its inventory efficiently, although it has shown improvement in collecting receivables. The fluctuating number of days of payables may indicate varying approaches to managing supplier payments. These trends highlight the importance of effective working capital management for Digi International, Inc.

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Long-term

The long-term activity ratios of Digi International, Inc. can provide insights into the efficiency with which the company utilizes its assets to generate sales.

The fixed asset turnover ratio measures how effectively the company uses its fixed assets to generate revenue. Over the period from 2019 to 2023, the fixed asset turnover ratio ranged from 14.07 to 25.44, indicating a generally high level of efficiency in utilizing fixed assets to generate sales. The increase in 2022 and 2023 compared to the previous years suggests improved efficiency in using fixed assets to generate revenue.

The total asset turnover ratio measures the efficiency of the company in utilizing all of its assets to generate sales. Digi International, Inc.'s total asset turnover ratio ranged from 0.45 to 0.53 over the same period. The ratios indicate a relatively low level of sales generated for each unit of assets, with a slight improvement in 2023 compared to 2022. This may suggest that the company could be more efficient in utilizing its total assets to generate sales.

Overall, while the company has shown strong efficiency in utilizing its fixed assets to generate sales, there may be potential to improve the efficiency of utilizing its total assets. The company should continue to monitor and improve its asset utilization to drive sales growth and overall performance.