Dover Corporation (DOV)

Short-term

Turnover ratios

Dover Corp.'s activity ratios provide insights into how effectively the company manages its assets and liabilities to generate sales.

1. Inventory turnover: This ratio measures how efficiently a company manages its inventory by selling and replacing goods. Dover Corp.'s inventory turnover has been relatively stable over the past five years, ranging from 3.98 to 5.60, with a minor fluctuation. A higher ratio indicates that the company is selling its inventory more quickly, which may be desirable as it reduces holding costs and potential obsolescence.

2. Receivables turnover: This ratio indicates how well Dover Corp. collects its accounts receivables from customers. The company's receivables turnover has been fairly consistent around 5.86 to 5.89 over the last five years. A higher receivables turnover ratio suggests that the company efficiently collects payments from customers and manages its credit policy effectively.

3. Payables turnover: The payables turnover ratio shows how quickly Dover Corp. pays its suppliers. The company's payables turnover has shown a slight upward trend from 4.59 to 5.59 over the past five years, indicating that the company is taking longer to pay suppliers. This may signify better cash management practices or improved bargaining power with suppliers.

4. Working capital turnover: This ratio demonstrates how effectively Dover Corp. utilizes its working capital to generate sales. The company's working capital turnover has fluctuated over the years, with a sharp decrease in 2022 followed by an increase in 2023. A higher working capital turnover ratio implies that the company is efficiently using its working capital to support sales activities.

Overall, Dover Corp.'s activity ratios suggest that the company has been managing its assets and liabilities effectively to support its sales activities. The stability and slight improvements in these ratios over time indicate a consistent performance in terms of asset management and working capital efficiency.

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Average number of days

Days of inventory on hand (DOH) measures how many days, on average, inventory is held before being sold. A decreasing trend in this ratio indicates efficient inventory management. Dover Corp.'s DOH has been fluctuating over the past five years, ranging from 65.16 days in 2019 to 91.62 days in 2022. The current DOH of 83.55 days suggests that inventory turnover has improved since 2022, albeit not yet reaching the efficiency level of 2019.

Days of sales outstanding (DSO) reflects the average number of days it takes for the company to collect payments after making a sale. A lower DSO ratio indicates effective credit management and faster cash conversion. Dover Corp.'s DSO has shown a slight downward trend, from 62.25 days in 2019 to 61.94 days in 2023. This decreasing trend indicates the company is improving in collecting payments more promptly.

Number of days of payables reveals the average number of days a company takes to pay its suppliers. A higher number of days suggests that the company is taking longer to settle its payables. Dover Corp.'s days of payables have been fluctuating, with a noticeable decrease from 79.48 days in 2019 to 65.35 days in 2023. This decline indicates that the company is now paying its suppliers more promptly compared to previous years, which could be a positive sign for supplier relationships.

Overall, Dover Corp. has shown improvements in managing its inventory turnover, collecting payments more efficiently, and paying suppliers more promptly over the past five years. These trends suggest that the company is enhancing its operating efficiency and cash flow management.

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Long-term

Dover Corp.'s long-term activity ratios indicate the efficiency with which the company utilizes its fixed assets and total assets to generate revenue. The fixed asset turnover ratio has shown a consistent trend of high turnover over the past five years, averaging around 8. The high fixed asset turnover suggests that Dover is effectively utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio has fluctuated over the same period, starting at 0.82 in 2019, dropping to 0.73 in 2020, and then gradually increasing to 0.78 in 2022, before declining to 0.74 in 2023. This ratio signifies the company's ability to generate sales relative to its total assets.

Overall, while Dover Corp. demonstrates strong efficiency in utilizing its fixed assets to generate revenue, there is some volatility in the utilization of its total assets to generate sales. Further investigation into the factors driving these fluctuations could provide valuable insights into the company's operational efficiency and asset management strategies.