Ethan Allen Interiors Inc (ETD)

Short-term

Turnover ratios

The activity ratios of Ethan Allen Interiors Inc. over the specified periods demonstrate notable trends in inventory management, receivables collection, payables settlement, and working capital efficiency.

Inventory Turnover:
The inventory turnover ratio exhibits relatively stable fluctuation within the range of approximately 1.63 to 2.21 times per period. During the period ending September 30, 2020, the ratio was 1.98, gradually increasing and reaching a peak of 2.21 in March 2023. Afterward, there is a mild decline, with the latest recorded figure of 1.73 for December 2024. These patterns suggest that the company has maintained a relatively consistent efficiency in converting inventory into sales, with some periods showing slight improvements. The fluctuations may reflect changes in inventory management practices or demand conditions, but overall, inventory turnover indicates moderate effectiveness in inventory utilization.

Receivables Turnover:
This ratio displays more variability, with significant peaks such as 125.13 times in December 2024 and notable dips like 42.82 times in September 2020. The overall trend illustrates periods of rapid receivables collection, notably in late 2024, indicating improved collection efficiency. Conversely, lower ratios in earlier periods reflect longer collection cycles. The high fluctuations imply varying credit policies and collection effectiveness, with recent data pointing toward advancements in receivables management.

Payables Turnover:
The payables turnover ratio shows a general upward trend from 4.34 times in September 2020 to a peak of 11.94 in March 2023, which indicates that the company is paying its suppliers more frequently over time, possibly reflecting efficient cash management or adjustments in payment policies. After reaching this peak, the ratio declines slightly but remains relatively stable through 2023. Towards the end of the observed period, data discontinuity suggests either reporting gaps or a temporary pause in activity ratio calculations.

Working Capital Turnover:
The working capital turnover ratio indicates the number of times the company utilizes its net working capital in sales generation. The ratio began at 12.72 in September 2020 and gradually declined to around 3.06 by March 2025, with fluctuations along the way. This downward trend signifies that the company has become less efficient in deploying working capital to generate sales over time. Possible reasons include changes in sales volume, working capital levels, or operational efficiency shifts. Occasional increases, such as a rebound to around 4.08 in September 2024, suggest short-term improvements or adjustments.

Summary:
Overall, Ethan Allen's activity ratios depict a company with steady inventory management but fluctuating receivables collection efficiency, sharper growth in payables turnover indicating tighter supplier payment cycles, and a declining trend in working capital utilization. These insights can inform assessments of operational efficiency, cash flow management, and resource utilization over the period analyzed.

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Average number of days

The activity ratios for Ethan Allen Interiors Inc, focusing on inventory management, receivables collection, and payables obligations, exhibit notable trends over the analyzed period.

Days of Inventory on Hand (DOH):
The company's inventory holding period fluctuated significantly from September 2020 through June 2025. Initially, the DOH remained relatively stable around 180 days (184.11 days in September 2020 to 194.85 days in December 2021). However, a marked increase was observed starting March 2022, peaking at approximately 214.49 days in the same quarter, indicating a slowdown in inventory turnover. Post-peak, the DOH experienced some reduction, reaching its lowest at 165.38 days in March 2023, suggesting improved inventory efficiency. Nonetheless, the period from September 2023 onward shows a resurgence, with DOH rising back above 200 days, reaching 224.51 days in March 2025, indicative of increasing inventory levels or slower inventory turnover.

Days of Sales Outstanding (DSO):
The company's receivables collection period remained consistently low throughout the period, reflecting efficient credit and collection practices. The DSO generally ranged from approximately 2.92 to 8.52 days. Notably, the lowest DSO was observed at 2.92 days in December 2024, while a slight increase occurred during March 2023 at 6.92 days. The overall trend suggests effective management of receivables with minimal extension of credit terms.

Number of Days of Payables:
The payable period experienced considerable variability. Starting from around 84 days in September 2020, it decreased to approximately 44-45 days by the end of 2021, indicating a shorter timeframe for settling obligations. A slight increase occurred during 2022 and into 2023, with the payables period reaching approximately 39-40 days in mid-2024 before data points become unavailable in late 2024 and 2025. The initial decline suggests a shift toward more stringent payment timing, whereas subsequent increases may reflect changes in supplier payment strategies or liquidity management.

Summary observations:
- The inventory turnover period increased significantly during 2022 and into 2023, indicating potential accumulation of inventory or reduced sales velocity during that time, with a subsequent partial reduction before rising again.
- Receivables collection remained highly efficient, with DSO consistently low, signifying prompt customer payments.
- Payables management initially shortened the payment period, possibly to conserve cash or negotiate better terms, before stabilizing at a somewhat longer duration.

Altogether, these activity ratios reflect operational strategies balancing inventory levels, receivables collection, and payables obligations, with patterns likely influenced by sales fluctuations, supply chain dynamics, and liquidity preferences over the period analyzed.

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Long-term

The analysis of Ethan Allen Interiors Inc.'s long-term activity ratios, based on the provided data, indicates notable trends over the specified periods.

Fixed Asset Turnover: This ratio measures the efficiency with which the company utilizes its fixed assets to generate sales. From September 2020 to June 2022, there is a consistent upward trend, with the ratio increasing from 1.66 to a peak of 2.52. This suggests that during this period, the company was effectively improving its utilization of fixed assets, possibly through operational efficiencies or strategic asset management. However, after June 2022, a declining trend is observed, with the ratio decreasing to 2.19 by September 2023. Such a decline may indicate reduced asset efficiency, potentially due to factors such as asset underutilization or increased investments not yet fully contributing to sales.

Total Asset Turnover: This ratio assesses the overall efficiency in using all assets to generate sales. From September 2020 through December 2022, the ratio shows a gradual increase from 0.91 to a peak of 1.18, reflecting improved asset utilization overall during this timeframe. Post-December 2022, the ratio exhibits a downward trend, decreasing steadily to 0.84 by March 2025. This decline indicates a reduction in the company's overall asset utilization efficiency, which could be attributable to factors like increased asset base without proportional sales growth, changes in operational strategy, or market conditions affecting sales.

In summary, Ethan Allen Interiors Inc. experienced a period of efficiency improvements in both fixed and total asset utilization through 2021 and early 2022. Since then, both ratios have shown a downward trend, suggesting a moderation or decline in asset utilization effectiveness over the recent periods. This information could point toward strategic shifts, market challenges, or investment phases that have yet to translate into increased sales efficiency.