Enerpac Tool Group Corp (EPAC)

Short-term

Turnover ratios

The activity ratios of Enerpac Tool Group Corp provide insights into the efficiency of the company's operational processes.

The inventory turnover ratio has shown a consistent trend, with a slight increase in 2023 compared to the previous year. This indicates that the company is managing its inventory more efficiently, as it is able to sell and replace inventory at a faster rate.

The receivables turnover ratio has also demonstrated improvement, reaching its highest point in 2023. This suggests that the company is collecting its receivables more quickly, which can enhance cash flow and reduce the risk of bad debts.

In terms of payables turnover, there has been fluctuation in the ratio over the years, with a significant increase in 2023. This indicates that the company is taking longer to pay its suppliers, which can be beneficial for cash flow and working capital management.

The working capital turnover has exhibited a generally increasing trend, reaching its peak in 2022 before a slight decrease in 2023. This signifies that the company is generating sales in relation to its working capital at a more efficient rate, reflecting an improvement in overall operational efficiency.

Overall, the activity ratios of Enerpac Tool Group Corp indicate positive trends in inventory management, receivables collection, and working capital utilization, contributing to improved operational efficiency and potentially enhancing financial performance.

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Average number of days

To analyze Enerpac Tool Group Corp's activity ratios, we will examine the days of inventory on hand (DOH), days of sales outstanding (DSO), and the number of days of payables for the past five years.

Days of Inventory on Hand (DOH):
The DOH measures the number of days it takes for a company to convert its inventory into sales. A lower DOH is generally favorable as it indicates efficient inventory management. Enerpac Tool Group Corp's DOH has fluctuated over the past five years, ranging from 77.80 days in 2019 to 99.86 days in 2022. The increase in DOH in 2022 may indicate a slower turnover of inventory, potentially tying up working capital.

Days of Sales Outstanding (DSO):
The DSO ratio reflects the average number of days it takes for a company to collect revenue after a sale is made. A lower DSO suggests efficient accounts receivable management. Enerpac Tool Group Corp's DSO has shown variability, with the lowest DSO of 59.58 days in 2023 and the highest of 71.27 days in 2021. The decreasing trend in DSO from 2022 to 2023 suggests improved efficiency in collecting receivables.

Number of Days of Payables:
The number of days of payables measures the average number of days it takes for a company to pay its suppliers, indicating its ability to manage its payables. Enerpac Tool Group Corp's days of payables have also fluctuated, with the lowest of 59.58 days in 2020 and the highest of 86.55 days in 2022. A longer period of payables may provide the company with additional working capital.

In summary, Enerpac Tool Group Corp's activity ratios indicate fluctuations in inventory management, accounts receivable collection, and payables management over the past five years. The company may need to focus on optimizing its inventory turnover and working capital management to enhance operational efficiency and cash flow.

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Long-term

The long-term activity ratios for Enerpac Tool Group Corp indicate the company's efficiency in utilizing its fixed assets and total assets to generate sales over the past five years.

The fixed asset turnover ratio has shown a positive trend, increasing from 8.03 in 2020 to 15.35 in 2023. This indicates that the company has been able to generate increasing levels of sales revenue relative to its investment in fixed assets. A higher fixed asset turnover ratio reflects efficient utilization of fixed assets to drive sales, which could suggest effective asset management and improved operational efficiency over the years.

Additionally, the total asset turnover ratio has also exhibited a positive trend, rising from 0.58 in 2019 to 0.78 in 2023. This signifies an improvement in the company's ability to generate sales revenue in relation to its total assets. A higher total asset turnover ratio indicates better efficiency in utilizing all assets, including fixed and current assets, to generate sales, which can be a positive sign of enhanced operational performance and productivity.

Overall, the increasing trends in both fixed asset turnover and total asset turnover ratios suggest that Enerpac Tool Group Corp has been effectively leveraging its assets to drive sales growth and improve operational efficiency over the analyzed period.