Dorman Products Inc (DORM)

Short-term

Turnover ratios

Dorman Products Inc's activity ratios provide insights into the efficiency of its operating cycle and management of its working capital.

Inventory turnover has fluctuated over the past five years, ranging from 1.55 to 2.38. In 2023, the inventory turnover improved to 1.95, indicating that the company efficiently sold and replaced its inventory.

The receivables turnover ratio has shown variability as well, with a peak of 4.06 in 2022 and a low of 2.37 in 2020. A higher turnover ratio indicates that Dorman Products Inc collected its receivables more quickly in 2023, compared to the previous year.

The payables turnover ratio has also been inconsistent, but generally improving over the period. A higher payables turnover ratio signifies that the company is managing its payables efficiently and paying its suppliers promptly. In 2023, the payables turnover ratio increased to 7.04, reflecting a positive trend in managing trade credit effectively.

The working capital turnover ratio has fluctuated over the years, with an increase in 2023 to 2.81. This ratio indicates the efficiency of Dorman Products Inc in generating revenue from its working capital.

Overall, Dorman Products Inc has shown improvements in its activity ratios in 2023, reflecting better management of inventory, receivables, payables, and working capital turnover compared to the previous years.

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Average number of days

Dorman Products Inc's activity ratios indicate the efficiency of the company in managing its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows a decrease from 235.96 days in 2022 to 186.96 days in 2023, indicating an improvement in managing inventory levels.
- However, the current DOH of 186.96 days is still relatively high compared to previous years, suggesting slow inventory turnover and potential inefficiencies in inventory management.

2. Days of Sales Outstanding (DSO):
- DSO decreased from 89.98 days in 2022 to 99.65 days in 2023, indicating that the company is collecting receivables slightly slower.
- The increase in DSO could be a cause for concern as it indicates a longer time taken to convert credit sales into cash, potentially affecting liquidity.

3. Number of Days of Payables:
- The days of payables show a slight decrease from 56.13 days in 2022 to 51.82 days in 2023.
- A lower number of days of payables indicates that the company is taking fewer days to pay its suppliers, which can strain cash flow but might also signal good relationships with suppliers.

Overall, Dorman Products Inc should focus on optimizing inventory turnover to reduce DOH, improving receivables collection to lower DSO, and carefully managing payables to balance cash flow needs with supplier relationships.

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Long-term

Dorman Products Inc's long-term activity ratios reflect its efficiency in utilizing fixed assets and total assets to generate sales revenue over the last five years. The fixed asset turnover ratio has been consistently high, averaging around 11.64 over the period, indicating that the company has been effectively leveraging its fixed assets to generate sales. This implies that Dorman Products Inc is efficiently utilizing its fixed assets to generate revenue, with a slight increase in 2023 compared to previous years.

On the other hand, the total asset turnover ratio has been more variable, ranging from 0.74 to 0.95 over the last five years. The ratio indicates how efficiently the company is using its total assets to generate sales. The decreasing trend seen in the total asset turnover ratio from 2020 to 2022 suggests a decline in asset efficiency during those years. However, the ratio improved in 2023 to 0.84, indicating an increase in efficiency in utilizing total assets to generate revenue.

Overall, Dorman Products Inc's long-term activity ratios suggest a strong performance in leveraging fixed assets for sales generation, with recent improvements in the efficiency of utilizing total assets. This demonstrates the company's ability to effectively manage its assets to drive revenue growth and operational performance over the years.