Ethan Allen Interiors Inc (ETD)

Short-term

Turnover ratios

Ethan Allen Interiors Inc's inventory turnover ratio has been fairly stable over the past five years, averaging around 4 times. This indicates that the company is efficient in managing its inventory and is able to sell and replace its inventory approximately 4 times during the year.

The receivables turnover ratio has shown a fluctuating trend over the same period, with a significant increase in 2024 compared to prior years. This suggests that the company has improved its ability to collect payments from customers, with a notable increase in sales generated from credit transactions.

Unfortunately, data for payables turnover is not provided, limiting our ability to assess the company's efficiency in managing its trade payables.

The working capital turnover ratio has declined over the years but still indicates that Ethan Allen Interiors is generating revenue efficiently relative to its working capital. This ratio measures how effectively the company generates revenue using its working capital, showing a decreasing trend over time.

Overall, while the inventory turnover and receivables turnover ratios reflect efficiency in managing inventory and collecting payments, the trend in working capital turnover suggests a decline in revenue generation relative to working capital employed. Additional information on payables turnover would provide a more comprehensive picture of the company's overall activity efficiency.

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Average number of days

Ethan Allen Interiors Inc's activity ratios can provide insight into how efficiently the company is managing its inventory, collecting receivables, and paying its suppliers.

1. Days of Inventory on Hand (DOH):
- Ethan Allen's DOH has fluctuated over the past five years, ranging from a low of 82.67 days to a high of 172.58 days.
- A decrease in DOH from 172.58 days in 2020 to 91.18 days in 2024 indicates that the company may have improved its inventory management efficiency, possibly by better aligning its production with demand.
- However, the DOH in 2024 at 91.18 days is still higher than the industry average, suggesting room for further improvement.

2. Days of Sales Outstanding (DSO):
- The trend in Ethan Allen's DSO over the past five years shows fluctuations but generally remains relatively low compared to the industry average.
- A decrease in DSO from 7.60 days in 2022 to 3.82 days in 2024 indicates that the company has become more efficient in collecting payments from customers.
- A lower DSO reflects faster collection of receivables, potentially improving cash flow and liquidity for the company.

3. Number of Days of Payables:
- The absence of data for the number of days of payables makes it difficult to analyze Ethan Allen's payment practices and its relationship with suppliers.
- Typically, a longer payment period may indicate better cash flow management, but it can also strain relationships with suppliers if extended excessively.

Overall, improvements in DOH and DSO suggest Ethan Allen has made progress in managing its inventory and receivables efficiently. However, without information on the number of days of payables, the complete picture of the company's working capital management remains incomplete.

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Long-term

The fixed asset turnover ratio for Ethan Allen Interiors Inc has shown a decreasing trend over the past five years, decreasing from 3.66 in 2022 to 3.00 in 2024. This indicates that the company is generating less revenue per dollar invested in fixed assets. However, it is important to note that a higher fixed asset turnover ratio is generally favorable as it indicates efficient utilization of fixed assets to generate sales.

On the other hand, the total asset turnover ratio has also shown a declining trend, decreasing from 1.14 in 2022 to 0.87 in 2024. This suggests that the company is generating less revenue per dollar of total assets, which may indicate inefficiencies in asset utilization or declining sales.

Overall, while the fixed asset turnover ratio for Ethan Allen Interiors Inc has been relatively stable compared to the total asset turnover ratio, both ratios indicate a decrease in the company's ability to generate sales from its assets over the past five years. This trend warrants further investigation to understand the underlying factors contributing to the declining efficiency in asset utilization.