Digi International Inc (DGII)

Working capital turnover

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Revenue	US$ in thousands	444,849	388,225	308,632	279,271	254,203
Total current assets	US$ in thousands	166,198	166,208	246,658	170,058	192,547
Total current liabilities	US$ in thousands	85,978	96,507	58,941	61,230	44,458
Working capital turnover		5.55	5.57	1.64	2.57	1.72

September 30, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $444,849K ÷ ($166,198K – $85,978K)
= 5.55

The working capital turnover ratio measures how efficiently a company is using its working capital to generate sales revenue. A higher ratio indicates better efficiency in utilizing working capital.

In the case of Digi International, Inc., the working capital turnover has shown some fluctuation over the past five years. In 2023, the ratio stands at 5.55, a slight decrease from the previous year's ratio of 5.57. This indicates that, on average, Digi International generated 5.55 times the amount of sales revenue for every dollar of working capital invested during the year. This suggests a very efficient use of working capital in generating sales.

Comparing this to prior years, a notable improvement is evident as the ratio has increased significantly from the 2021 ratio of 1.64, and even more from the 2019 ratio of 1.72. This improvement indicates that Digi International has become more effective in utilizing its working capital to drive sales, potentially through better inventory management, more efficient receivables collection, or improved payables management.

The steady increase in the working capital turnover ratio signifies that the company has been able to boost sales revenue relative to its investment in working capital, reflecting positively on its overall operational efficiency. Therefore, the trend indicates a more efficient use of working capital over the years, which can be seen as a positive sign of company performance and financial management.