Exponent Inc (EXPO)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | — | — | — | — | — |
| Receivables turnover | 3.21 | 3.02 | 3.33 | 3.58 | 3.47 |
| Payables turnover | 78.69 | 34.13 | 93.90 | 82.28 | 60.19 |
| Working capital turnover | 2.47 | 2.70 | 1.56 | 1.60 | 1.74 |
The activity ratios for Exponent Inc provide insights into how efficiently the company is managing its assets and operations.
1. Receivables turnover: This ratio indicates how many times, on average, the company collects its accounts receivable during a given period. The increasing trend from 2019 to 2021 suggests that Exponent has been improving its ability to convert credit sales into cash quickly. However, there was a slight decrease in 2022 and 2023, indicating a potential slowdown in the collection of accounts receivable.
2. Payables turnover: This ratio reflects how efficiently the company is managing its accounts payable. The sharp increase in payables turnover from 2019 to 2021, followed by a slight decrease in 2022 and then a further increase in 2023, could indicate changes in payment terms with suppliers. A high payables turnover ratio may suggest that Exponent is paying its suppliers quickly, which could impact cash flow management.
3. Working capital turnover: This ratio measures how effectively the company is using its working capital to generate sales. The decreasing trend from 2019 to 2021 and then a moderate increase in 2022 and 2023 may indicate fluctuations in sales relative to working capital availability. A higher ratio suggests better utilization of working capital to generate revenue.
Overall, it is important for Exponent Inc to monitor these activity ratios over time to ensure continued efficiency in managing its assets and operations. Variations in these ratios can provide valuable insights into the company's financial performance and operational efficiency.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 113.80 | 120.97 | 109.48 | 101.83 | 105.11 |
| Number of days of payables | days | 4.64 | 10.69 | 3.89 | 4.44 | 6.06 |
Days of inventory on hand (DOH) is not provided in the table, which means we do not have the specific information to analyze this ratio.
Days of sales outstanding (DSO) have fluctuated over the past five years, with a decreasing trend from 120.97 days in 2022 to 113.80 days in 2023. This indicates that on average, it took the company around 113.80 days to collect its accounts receivable in 2023. A lower DSO is generally preferable as it signifies a quicker collection of receivables, which can improve cash flow and liquidity.
The number of days of payables also varied during the same period, with a noticeable increase to 10.69 days in 2022 before dropping to 4.64 days in 2023. A lower number of days of payables means the company is taking less time to pay its suppliers, which could potentially strain liquidity. Conversely, a higher number of days of payables could indicate a more favorable position, allowing the company to hold onto cash longer before paying its obligations.
Overall, the decreasing trend in DSO coupled with the fluctuating number of days of payables suggests that Exponent Inc may be managing its receivables and payables more efficiently in recent years, potentially improving its working capital management. However, further analysis and comparisons with industry benchmarks are recommended to gain a more comprehensive understanding of the company's activity ratios.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 7.13 | 7.83 | 7.77 | 6.68 | 6.77 |
| Total asset turnover | 0.83 | 0.87 | 0.68 | 0.69 | 0.74 |
Exponent Inc's long-term activity ratios provide insights into the efficiency with which the company utilizes its fixed assets and total assets to generate revenue over the years.
The Fixed Asset Turnover ratio measures the company's ability to generate sales from its investments in fixed assets. Exponent Inc's Fixed Asset Turnover has shown a slightly decreasing trend from 6.77 in 2019 to 7.13 in 2023. This indicates that the company is effectively using its fixed assets to generate sales, with a higher ratio implying better utilization of fixed assets.
On the other hand, the Total Asset Turnover ratio reflects how efficiently the company generates sales from its total assets. Exponent Inc's Total Asset Turnover has fluctuated over the years, ranging from 0.69 in 2020 to 0.87 in 2022. The gradual decrease to 0.83 in 2023 suggests that the company may be experiencing challenges in generating sales relative to its total asset base.
In conclusion, while Exponent Inc has been maintaining a relatively high Fixed Asset Turnover ratio, indicating efficient utilization of fixed assets, its Total Asset Turnover ratio shows some volatility. It may be beneficial for the company to further evaluate and potentially optimize its total asset utilization to enhance overall operational efficiency and revenue generation.