ESAB Corp (ESAB)

Short-term

Turnover ratios

ESAB Corp's activity ratios provide insights into the company's efficiency in managing its inventory, receivables, payables, and working capital.

1. Inventory turnover: ESAB Corp's inventory turnover has been relatively stable over the past five quarters, ranging from 3.84 to 4.48. This indicates that, on average, ESAB Corp sells and replenishes its inventory about 4 times per year. A higher inventory turnover ratio is generally preferable as it signifies that inventory is being managed efficiently.

2. Receivables turnover: ESAB Corp's receivables turnover has shown a consistent pattern of around 6.5 to 7.2 over the same period. This suggests that ESAB Corp collects its accounts receivables approximately 6.5 to 7.2 times a year. A higher receivables turnover ratio implies that the company is effective in collecting payments from its customers promptly.

3. Payables turnover: ESAB Corp's payables turnover ratio has fluctuated between 4.84 and 5.83 in the last five quarters. This indicates that ESAB Corp settles its payables approximately 4.84 to 5.83 times per year. A higher payables turnover ratio could suggest that the company is managing its payables efficiently by paying suppliers promptly.

4. Working capital turnover: ESAB Corp's working capital turnover has varied from 5.93 to 7.35 over the past five quarters. This ratio signifies how effectively ESAB Corp generates revenue in relation to its working capital. A higher working capital turnover ratio indicates that ESAB Corp generates more revenue per unit of working capital investment.

In summary, ESAB Corp's activity ratios overall reflect a level of efficiency in managing its inventory, receivables, payables, and working capital. Monitoring these ratios over time can help assess the company's operational performance and efficiency in utilizing its resources.

---

Average number of days

Days of Inventory on Hand (DOH) for ESAB Corp has shown a decreasing trend from Q1 2023 to Q4 2023. This indicates that the company is managing its inventory more efficiently, possibly through better inventory management, forecasting, or production processes.

Days of Sales Outstanding (DSO) remained relatively stable over the same period, with a slight increase in Q4 2023 compared to Q1 2023. This suggests that ESAB Corp is able to collect its accounts receivable within a consistent timeframe, which is generally a positive indicator of effective credit management.

The Number of Days of Payables for ESAB Corp has fluctuated over the five quarters, showing an increase in Q4 2023 compared to Q1 2023. This indicates that the company may be taking longer to pay its suppliers, which could be a strategic decision to optimize cash flow or negotiate better payment terms.

Overall, ESAB Corp's activity ratios suggest that the company is improving its inventory management, maintaining steady accounts receivable collection, and potentially adjusting its payment terms with suppliers to better manage working capital.

---

Long-term

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. ESAB Corp's fixed asset turnover has been consistently high, ranging from 9.12 to 9.95 over the past five quarters. This indicates that for every dollar invested in fixed assets, ESAB Corp is generating approximately 9.12 to 9.95 dollars in revenue.

On the other hand, the total asset turnover ratio reflects how well a company is utilizing all its assets to generate revenue. ESAB Corp's total asset turnover has ranged from 0.68 to 0.73 over the same period. Though lower than the fixed asset turnover, these figures suggest that ESAB Corp is still efficiently using its total assets to generate revenue, with each dollar of assets generating approximately 0.68 to 0.73 dollars in revenue.

Overall, both the fixed asset turnover and total asset turnover ratios indicate that ESAB Corp is effectively utilizing its assets to generate revenue, with the fixed asset turnover being particularly high, emphasizing the company's efficiency in utilizing its long-term assets.