Dycom Industries Inc (DY)

Short-term

Turnover ratios

Dycom Industries Inc's inventory turnover has shown a consistent improvement over the past few quarters, indicating efficient management of its inventory levels. The company's ability to turn over its inventory quickly has increased, from 3.14 times in October 2019 to 38.04 times in July 2024. This suggests that Dycom Industries is effectively managing its inventory, which can help reduce holding costs and minimize the risk of obsolete inventory.

On the other hand, the receivables turnover ratio has fluctuated slightly but remains within a reasonable range, indicating that Dycom Industries is collecting its accounts receivable efficiently. This ratio has ranged from 2.82 to 3.54 over the same period. A higher turnover ratio signifies that the company is collecting its outstanding receivables more quickly.

The payables turnover ratio has also shown variability but generally reflects that Dycom Industries is managing its trade payables effectively. The company's ability to pay off its creditors has improved, with the ratio ranging from 7.11 to 18.28 during the period under review. A higher payables turnover ratio suggests that the company is taking advantage of credit terms without exploiting its suppliers.

Dycom Industries Inc's working capital turnover has shown fluctuations, indicating changes in the efficiency of the company's use of working capital to generate sales. The ratio has varied from 2.20 to 4.44, with higher figures indicating better efficiency in utilizing its working capital. Overall, Dycom Industries seems to be effectively managing its working capital to support its operations and generate sales.

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Average number of days

The analysis of Dycom Industries Inc activity ratios over the various periods provides insights into its operational efficiency and management of inventories, receivables, and payables.

1. Days of Inventory on Hand (DOH): The company's inventory management has shown a consistent improvement from 116.13 days in October 2019 to 9.59 days in July 2024. This indicates that Dycom has been effectively managing its inventory levels, moving towards a leaner and more efficient inventory turnover process. Lower DOH values suggest that the company is turning its inventory into sales rapidly, which is a positive sign for its liquidity and working capital management.

2. Days of Sales Outstanding (DSO): Dycom's days of sales outstanding have fluctuated over time, with values ranging from 98.20 days to 129.54 days. A lower DSO indicates that the company is collecting its accounts receivable more quickly, improving its cash flow and reducing the risk of bad debts. However, the fluctuations in DSO may indicate variability in the company's credit policies or the creditworthiness of its customers.

3. Number of Days of Payables: The days of payables for Dycom have been relatively stable, with values hovering between 19.96 days and 51.31 days. A higher number of days of payables suggests that the company is taking longer to pay its suppliers, potentially benefiting from extended payment terms and improving its cash flow position. However, excessively long payment terms could strain supplier relationships and impact the availability of credit.

Overall, Dycom's activity ratios reflect a mixed performance in managing its working capital components. The company's efficient inventory management is commendable, while its collection of receivables and payment of payables exhibit some variability that may require further attention to maintain a healthy cash conversion cycle and working capital position.

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Long-term

The fixed asset turnover ratio measures the efficiency with which a company generates sales revenue from its investment in fixed assets. Dycom Industries Inc has maintained a consistently high fixed asset turnover ratio ranging from 8.44 to 11.67 over the past few years. This indicates that Dycom is effectively utilizing its fixed assets to generate sales, with higher ratios suggesting better asset utilization.

On the other hand, the total asset turnover ratio reflects how efficiently a company generates sales from all its assets. Dycom's total asset turnover ratio fluctuated between 1.37 and 1.71 during the same period. The ratios indicate that Dycom is efficient in generating sales from its total assets, although there have been some fluctuations over time.

Overall, Dycom Industries Inc has shown strong efficiency in utilizing both its fixed and total assets to generate sales revenue, as evidenced by the high turnover ratios compared to industry averages. However, it is important to continue monitoring these ratios to ensure continued operational efficiency and profitability.