Ethan Allen Interiors Inc (ETD)

Short-term

Turnover ratios

The activity ratios for Ethan Allen Interiors Inc. over the period from June 30, 2021, to June 30, 2025, reveal noteworthy trends in inventory management, receivables collection, payables payment, and overall working capital efficiency.

Inventory Turnover:
The inventory turnover ratio experienced fluctuations across the period. It decreased from 2.03 times in 2021 to a low of 1.89 in 2022, indicating a slight slowdown in inventory liquidation during that year. Subsequently, the ratio increased to 2.08 in 2023, suggesting an improvement in inventory management, before declining again to 1.78 in 2024 and further to 1.72 in 2025. The overall trend indicates a modest decline in inventory turnover efficiency in recent years, possibly reflecting increased inventory levels or slower sales.

Receivables Turnover:
Receivables turnover showed considerable variation. It was high at 75.91 times in 2021 but dropped significantly to 48.05 times in 2022, implying a longer collection period or less efficient receivables management during that year. The ratio then increased substantially to 68.36 in 2023, indicating an improvement in receivables collection, and further accelerated to 95.51 in 2024, reaching a peak. The upward trend continued in 2025 with a ratio of 101.33, reflecting increasingly efficient collection practices and possibly shorter receivables periods.

Payables Turnover:
The payables turnover ratio exhibits a generally increasing trend. It rose from 4.74 times in 2021 to 8.91 in 2022, then continued upward to 10.89 in 2023. Although it declined slightly to 9.24 in 2024, it rose again to 10.96 in 2025. The rising trend indicates an overall speeding-up in the firm’s payment of its obligations to suppliers, potentially reflecting better cash flow management or strategic payment policies.

Working Capital Turnover:
This ratio shows a declining trend from 9.60 in 2021 to 4.03 in 2023, indicating that the firm is generating less sales per dollar of working capital over time, which may suggest increased working capital investment or reduced operational efficiency. Thereafter, the ratio stabilizes somewhat, with a slight increase to 3.61 in 2024 and a modest recovery to 3.91 in 2025, suggesting some improvements in the efficiency of utilizing working capital.

Overall, the activity ratios suggest that Ethan Allen Interiors Inc. has been actively adjusting its operational strategies. The notable increase in receivables turnover indicates enhanced collection efficiency, while the fluctuations in inventory turnover suggest variability in inventory management. The steady increase in payables turnover reflects more prompt payments to suppliers, and the general decline in working capital turnover points to a potential increase in working capital relative to sales or efficiency challenges that have persisted over the reviewed period.

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Average number of days

The analysis of Ethan Allen Interiors Inc.'s activity ratios over the specified periods provides insight into the company's operational efficiency and working capital management.

Days of Inventory on Hand (DOH):
- The DOH increased from approximately 179.93 days in June 2021 to a peak of 193.43 days in June 2022.
- Subsequently, it decreased to around 175.09 days in June 2023, indicating an improvement in inventory turnover.
- However, there is a notable rise again, with DOH reaching approximately 204.79 days in June 2024 and further increasing to about 212.04 days in June 2025.

This fluctuation suggests periods of inventory buildup and reduction, possibly reflecting changes in inventory management policies, sales cycles, or product mix. The recent increase indicates that inventory is being held longer, potentially tying up more working capital.

Days of Sales Outstanding (DSO):
- The DSO figures present a relatively short collection period, starting at 4.81 days in June 2021 and rising modestly to 7.60 days in June 2022.
- Subsequently, the DSO decreased to 5.34 days in June 2023 and further contracted to approximately 3.82 days in June 2024, maintaining a low level of receivables outstanding.
- The latest data shows a slight decrease again, with DSO at approximately 3.60 days in June 2025.

This consistency demonstrates efficient receivables collection practices, with the company being able to convert sales into cash rapidly.

Number of Days of Payables:
- The number of days payable decreased from about 77.05 days in June 2021 to 40.95 days in June 2022, then further shortened to 33.52 days in June 2023.
- Thereafter, the payable period increased slightly to around 39.50 days in June 2024 and settled at approximately 33.32 days in June 2025.

The fluctuations indicate a tightening of payment terms during the period between 2021 and 2023, followed by a slight easing thereafter. Shorter payable periods may reflect cautious management of payables or a strategic effort to optimize cash flow, while increases in payable days could indicate supplier negotiations or shifts in liquidity management.

Overall Interpretation:
The activity ratios reveal a pattern of operational adjustments over the periods analyzed. The relatively stable and low DSO suggests that receivables are managed effectively. In contrast, the DOH has experienced variability, with a recent increasing trend indicating longer inventory holding durations, which could impact working capital requirements. The fluctuating payables period points to active management of payment strategies with suppliers.

These ratios collectively imply that Ethan Allen Interiors Inc. maintains good receivables collection efficiency but has encountered periods of inventory accumulation that may require attention to optimize overall asset utilization and working capital management.

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Long-term

The analysis of Ethan Allen Interiors Inc's long-term activity ratios reveals insights into the company's utilization efficiency of its fixed assets and total assets over the specified period from June 30, 2021, to June 30, 2025.

The Fixed Asset Turnover ratio indicates the company's ability to generate sales from its fixed assets. It increased from 2.11 in 2021 to a peak of 2.42 in 2022, suggesting improved efficiency or increased sales relative to fixed assets during that period. Subsequently, it experienced a decline to 2.34 in 2023 and further decreased to 1.96 in 2024, followed by a slight decline to 1.92 in 2025. The decline after 2022 indicates a reduction in sales efficiency relative to fixed assets, which could be attributable to factors such as asset underutilization, increased capital base without proportional sales growth, or strategic investments that have yet to translate into higher sales productivity.

The Total Asset Turnover ratio moved in a corresponding pattern, rising from 1.00 in 2021 to 1.14 in 2022, reflecting an improved overall asset utilization. However, after 2022, this ratio gradually declined to 1.06 in 2023, then further to 0.87 in 2024, and to 0.83 in 2025. The decreasing trend indicates that, relative to its total assets, the company’s sales generation efficiency has diminished over time, which may be a result of asset base expansion without proportional sales increases or operational inefficiencies.

Overall, these ratios suggest that Ethan Allen Interiors Inc experienced a period of improved asset utilization leading up to 2022, followed by a gradual decline in efficiency. This trend warrants further investigation into operational strategies, asset management, and sales performance to understand the underlying causes and implications for the company’s long-term resource utilization.