ESCO Technologies Inc (ESE)

Short-term

Turnover ratios

ESCO Technologies Inc's activity ratios provide insight into how efficiently the company is managing its inventory, receivables, payables, and working capital over the past five years.

1. Inventory turnover: The inventory turnover ratio measures how many times a company sells and replaces its inventory during a period. ESCO's inventory turnover ranged between 2.98 to 3.39 over the past five years, indicating a relatively consistent performance in managing its inventory. A higher inventory turnover ratio generally suggests efficient inventory management.

2. Receivables turnover: The receivables turnover ratio reflects how quickly a company collects on its credit sales. ESCO's receivables turnover ratio ranged from 4.20 to 5.18 during the period, showing a declining trend. The decreasing ratio may indicate potential issues with collecting accounts receivable efficiently, which could impact cash flow.

3. Payables turnover: The payables turnover ratio measures how quickly a company pays its suppliers. ESCO's payables turnover ratio ranged between 6.33 to 9.07 over the past five years, showing a fluctuating trend. A lower payables turnover ratio indicates the company is taking longer to pay its suppliers, which could impact relationships or leverage available credit terms.

4. Working capital turnover: The working capital turnover ratio indicates how effectively a company utilizes its working capital to generate sales. ESCO's working capital turnover ranged between 3.17 to 3.88 during the period, reflecting a consistent performance. A higher working capital turnover ratio suggests efficient use of working capital to fund operations and generate revenue.

Overall, ESCO Technologies Inc has shown relatively stable activity ratios over the years, with some fluctuations in receivables turnover and payables turnover. It will be important for the company to monitor and analyze these ratios to ensure effective management of its assets and liabilities for sustained financial performance.

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Average number of days

ESCO Technologies Inc's activity ratios indicate a fluctuating trend in managing its inventory, receivables, and payables over the past five years. The Days of Inventory on Hand (DOH) has seen an increasing trend, which suggests that the company's inventory turnover is declining, requiring more days to sell its inventory. This could tie up working capital and increase carrying costs.

In contrast, the Days of Sales Outstanding (DSO), representing how long it takes for the company to collect its receivables, has shown some volatility, with an overall increasing trend. This implies that ESCO Technologies is taking longer to collect payments from customers, potentially impacting cash flow and liquidity.

On the positive side, the Number of Days of Payables has been relatively stable over the years, indicating that the company has been managing its payables effectively. A longer payment period can help improve cash flow and working capital management.

Overall, ESCO Technologies Inc should focus on optimizing its inventory management to reduce the DOH, and work towards improving its collection process to lower the DSO. Maintaining stable payment terms can be advantageous in managing cash flow and supplier relationships.

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Long-term

ESCO Technologies Inc's long-term activity ratios show a consistent trend of efficiency in utilizing its fixed assets over the past five years. The fixed asset turnover ratio has ranged from 4.63 to 6.09, with a notable peak in 2023. This indicates that the company generates significant sales revenue in relation to its investment in fixed assets, reflecting strong operational efficiency and asset utilization.

Furthermore, the total asset turnover ratio has also shown a consistent improvement over the period, increasing from 0.45 in 2021 to 0.55 in 2024. This suggests that ESCO Technologies Inc is effectively using its total assets to generate sales. The upward trend in total asset turnover indicates growing efficiency in utilizing all assets, both fixed and current, to generate revenue.

Overall, the long-term activity ratios of ESCO Technologies Inc demonstrate a positive trend in asset efficiency and effectiveness in generating sales. The company's ability to generate revenue from both fixed and total assets highlights its operational prowess and strategic asset management.