Enerpac Tool Group Corp (EPAC)

Short-term

Turnover ratios

Enerpac Tool Group Corp's activity ratios provide insight into how effectively the company manages its assets and liabilities to generate sales.

1. Inventory turnover: Enerpac's inventory turnover has been consistently around 4 times per year over the past five years. This indicates that the company is effectively managing its inventory levels, with a slight dip observed in 2022 but remaining relatively stable overall.

2. Receivables turnover: Enerpac's receivables turnover has also been relatively stable around 5-6 times per year, reflecting the company's ability to collect payment from customers in a timely manner. The higher turnover indicates that Enerpac is efficient in converting credit sales into cash.

3. Payables turnover: Enerpac's payables turnover has shown some fluctuations, with a notable decrease in 2022. However, the ratio has generally been above 4 times per year, indicating that the company is managing its accounts payable effectively by paying suppliers in a timely manner.

4. Working capital turnover: Enerpac's working capital turnover has fluctuated over the years but has generally been above 2 times per year. This ratio indicates the company's ability to generate sales relative to its working capital investment, with a higher ratio implying more efficient use of working capital.

Overall, Enerpac Tool Group Corp's activity ratios suggest that the company is effectively managing its inventory, receivables, payables, and working capital to support its sales operations. Continuously monitoring these ratios can help the company identify areas for improvement and optimize its operating efficiency.

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Average number of days

Enerpac Tool Group Corp's activity ratios provide insights into the company's management of its inventory, accounts receivable, and accounts payable over the past five years.

1. Days of Inventory on Hand (DOH):
- The trend in DOH has fluctuated over the five-year period, ranging from a low of 90.01 days in 2023 to a high of 99.86 days in 2022.
- The average DOH over the period was approximately 94.77 days, indicating that, on average, Enerpac Tool Group holds its inventory for about 94.77 days before it is sold.
- A lower DOH is generally more favorable as it implies quicker inventory turnover and less capital tied up in inventory.

2. Days of Sales Outstanding (DSO):
- DSO has also varied over the five-year period, with the lowest figure of 59.58 days in 2023 and the highest figure of 71.27 days in 2021.
- The average DSO over the period was approximately 65.59 days, suggesting that, on average, Enerpac Tool Group takes about 65.59 days to collect its accounts receivable.
- A lower DSO is preferable as it signifies faster collection of receivables and improved liquidity.

3. Number of Days of Payables:
- The trend in the number of days of payables has been inconsistent, with fluctuations from a low of 54.87 days in 2024 to a high of 86.55 days in 2022.
- The average number of days of payables over the period was approximately 68.20 days, indicating that, on average, Enerpac Tool Group takes around 68.20 days to settle its accounts payable.
- A higher number of days of payables suggests that the company is taking longer to pay its suppliers, which can help preserve cash flow but also potentially strain supplier relationships.

In summary, Enerpac Tool Group Corp's activity ratios have shown variability over the past five years, with potential areas for improvement in managing inventory turnover, accounts receivable collection, and accounts payable settlement to optimize operational efficiency and working capital management.

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Long-term

Enerpac Tool Group Corp's long-term activity ratios reflect its efficiency in managing fixed assets and total assets to generate sales over the past five years. The fixed asset turnover has generally shown an increasing trend from 2020 to 2023, indicating that the company has been able to generate more revenue per dollar invested in fixed assets. However, there was a slight decrease in 2024 compared to the previous year, which suggests a potential decrease in efficiency in utilizing fixed assets.

In contrast, the total asset turnover ratio has also shown an upward trend over the same period, indicating that the company has become more efficient in generating sales relative to its total assets. This improvement implies that Enerpac Tool Group Corp has been able to increase its revenue without significantly increasing its total assets, which is a positive sign of operational efficiency.

Overall, both the fixed asset turnover and total asset turnover ratios suggest that Enerpac Tool Group Corp has been making strides in optimizing its asset utilization and operational efficiency over the past five years. However, analysts may want to further investigate the slight decline in the fixed asset turnover ratio in 2024 to understand any underlying reasons behind this change.