ESCO Technologies Inc (ESE)

Short-term

Turnover ratios

The activity ratios of Esco Technologies, Inc. provide insights into the efficiency of its management of inventory, receivables, payables, and working capital over the past five years.

The inventory turnover ratio indicates how many times the company's inventory has been sold and replaced during the year. Esco's inventory turnover has fluctuated over the past five years, ranging from 3.02 to 3.95 times. The decrease in 2021 followed by an increase in 2022 and 2023 suggests that the company improved its inventory management efficiency.

The receivables turnover ratio measures how effectively the company is collecting on credit sales. Esco's receivables turnover has also shown variability, with a peak in 2022 and a small decline in 2023. This may indicate a slightly slower collection of receivables in the most recent period.

The payables turnover ratio assesses how well the company is managing its trade credit from suppliers. Esco's payables turnover has generally been in a downward trend, signaling that the company is taking longer to pay its suppliers. This could potentially strain its relationships with suppliers or indicate challenges in managing working capital.

The working capital turnover ratio reveals how efficiently the company is using its working capital to generate sales. Esco's working capital turnover has been relatively stable over the past five years, with a slight upward trend. This indicates that the company has been effectively leveraging its working capital to support sales activities.

Overall, Esco Technologies, Inc.'s activity ratios show some fluctuations, suggesting areas for potential improvement in inventory management and accounts receivable collection. The trend in payables turnover warrants attention to ensure healthy supplier relationships and effective working capital management.

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Average number of days

Activity ratios provide insights into a company's efficiency in managing its inventory, accounts receivable, and accounts payable. Let's analyze Esco Technologies, Inc.'s activity ratios over the past five years:

Days of Inventory on Hand (DOH):
- Esco's DOH has shown a fluctuating trend over the years, with a noticeable increase from 2019 to 2021 and a slight decrease from 2021 to 2023. This indicates that the company might be carrying more inventory on average, which could tie up working capital and potentially lead to higher carrying costs. However, the recent decrease suggests improved inventory turnover.

Days of Sales Outstanding (DSO):
- Esco's DSO has also displayed variation over the years, with a peak in 2019 followed by a decline in 2020 and 2022, and a subsequent increase in 2023. This trend suggests that the collection period for accounts receivable initially improved but then extended in the most recent period, potentially indicating a need for more effective credit management.

Number of Days of Payables:
- Esco's days of payables remained relatively stable from 2019 to 2022 but then increased notably in 2023. This could imply that the company has taken longer to settle its payables, possibly indicating a change in payment terms or working capital management strategies.

In summary, Esco Technologies, Inc.'s activity ratios show fluctuations over the years, with potential implications for inventory management, accounts receivable collection, and accounts payable policies. Further analysis of the company's operations and industry norms would provide a more comprehensive understanding of its efficiency in managing working capital and liquidity.

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Long-term

The long-term activity ratios of Esco Technologies, Inc. provide insight into the company's efficiency in utilizing its fixed and total assets to generate sales.

The fixed asset turnover ratio has shown a consistent improvement over the past five years, increasing from 5.03 in 2019 to 6.15 in 2023. This indicates that the company has been able to generate more sales relative to its investment in fixed assets. The higher turnover suggests improved efficiency in utilizing property, plant, and equipment to generate revenue.

On the other hand, the total asset turnover ratio has fluctuated over the same period, with a slight decrease from 0.55 in 2019 to 0.57 in 2023. This ratio measures the ability of the company to generate sales relative to its total assets. The fluctuation may indicate changes in the company's sales volume in relation to its total asset base.

Overall, the improving trend in fixed asset turnover reflects enhanced efficiency in utilizing long-term assets to generate revenue. However, the fluctuation in the total asset turnover ratio suggests a need for further analysis to understand the underlying factors affecting the company's sales relative to total assets.