Fastenal Company (FAST)

Short-term

Turnover ratios

Fastenal Co.'s activity ratios reveal how efficiently the company manages its inventory, receivables, payables, and working capital.

1. Inventory turnover: Fastenal Co.'s inventory turnover has been gradually improving over the last five years, reaching 2.62 in 2023. This indicates that the company is selling its inventory more efficiently, with inventory being sold and replaced approximately 2.62 times during the year.

2. Receivables turnover: The receivables turnover ratio has slightly fluctuated but generally remained stable over the years, with a value of 6.75 in 2023. This ratio signifies that Fastenal Co. collects its receivables approximately 6.75 times a year, indicating an effective management of credit sales and collection efforts.

3. Payables turnover: Fastenal Co.'s payables turnover ratio has shown a consistent upward trend, reaching 15.12 in 2023. This suggests that the company is paying its suppliers more frequently, which could indicate favorable payment terms or efficient cash management.

4. Working capital turnover: The working capital turnover ratio has been steadily increasing, with a value of 3.11 in 2023. This ratio reflects the company's ability to generate revenue relative to its working capital, indicating improved efficiency in the utilization of its current assets in generating sales.

Overall, Fastenal Co. demonstrates sound activity management based on its activity ratios, with improvements in inventory turnover, stable receivables turnover, increasing payables turnover, and a rising working capital turnover ratio over the years.

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Average number of days

The activity ratios of Fastenal Co. provide insights into the efficiency of the company's operations in managing its inventory, accounts receivable, and accounts payable.

1. Days of Inventory on Hand (DOH):
- Fastenal Co. has managed to reduce its days of inventory on hand from 176.96 days in 2019 to 139.22 days in 2023. This indicates that the company has been more efficient in managing its inventory levels, possibly through better inventory control and demand forecasting.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding for Fastenal Co. have remained relatively stable over the years, fluctuating between 49.73 days in 2020 to 54.66 days in 2021. This metric demonstrates how long it takes for the company to collect payments from its customers. A lower DSO indicates faster collection of receivables, which can positively impact cash flow.

3. Number of Days of Payables:
- Fastenal Co. has consistently maintained a relatively stable number of days of payables over the years, with figures ranging from 24.15 days in 2023 to 26.31 days in 2021. This ratio represents the average number of days it takes for the company to pay its suppliers. A higher number of days of payables may suggest that the company is effectively managing its cash flow by taking advantage of extended payment terms.

Overall, the trends in these activity ratios for Fastenal Co. indicate improved inventory management, stable accounts receivable collection practices, and consistent accounts payable practices. Efficient management of these operational aspects is crucial for maintaining a healthy cash flow and optimizing working capital.

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Long-term

Fastenal Co.'s long-term activity ratios reflect its efficiency in managing assets to generate sales. The fixed asset turnover has shown a consistent increasing trend over the past five years, reaching 7.27 in 2023 from 5.21 in 2019. This indicates that Fastenal is generating $7.27 in sales for every dollar invested in fixed assets, showcasing improved efficiency in utilizing its long-term assets.

In contrast, the total asset turnover ratio has fluctuated slightly over the same period, with a peak of 1.65 in 2023. This ratio measures Fastenal's ability to generate sales from all assets, including both fixed and current assets. While the ratio saw some variations, the overall trend indicates that Fastenal is effectively utilizing its total assets to generate sales.

Overall, Fastenal Co.'s long-term activity ratios suggest that the company has been successful in efficiently managing its assets to drive sales growth, particularly in terms of fixed asset turnover which has shown a notable improvement over the years.