Fortune Brands Innovations Inc. (FBIN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.08 | 2.73 | 3.19 | 1.68 | 5.17 |
| Receivables turnover | 8.66 | 9.05 | 5.42 | 4.93 | 9.23 |
| Payables turnover | 7.06 | 6.62 | 5.06 | 2.35 | 8.07 |
| Working capital turnover | 5.47 | 5.16 | 6.21 | 4.19 | 11.79 |
Inventory turnover for Fortune Brands Innovations Inc. has shown fluctuations over the past five years, ranging from a low of 1.68 in 2020 to a high of 5.17 in 2019. The higher the inventory turnover ratio, the more efficiently the company is managing its inventory levels. While the current ratio of 4.08 indicates an improvement compared to the previous year, it is still lower than the peak in 2019.
Receivables turnover reflects how effectively the company is collecting on its credit sales. Fortune Brands Innovations Inc. has maintained a relatively stable receivables turnover ratio over the past five years, with values ranging from 4.93 to 9.23. A higher turnover ratio suggests that the company is efficiently collecting payments from customers.
The payables turnover ratio measures how quickly a company pays its suppliers. Fortune Brands Innovations Inc. has demonstrated consistent improvement in this ratio over the years, increasing from 2.35 in 2020 to 7.06 in 2023. A higher payables turnover ratio indicates that the company is managing its payables effectively, potentially negotiating favorable credit terms.
The working capital turnover ratio shows how efficiently the company is utilizing its working capital to generate sales. Fortune Brands Innovations Inc. experienced a decline in this ratio from 11.79 in 2019 to 5.47 in 2023. A higher working capital turnover ratio indicates better utilization of resources to drive revenue.
Overall, while there have been fluctuations in activity ratios for Fortune Brands Innovations Inc. over the past five years, the company has shown improvements in managing its inventory, receivables, payables, and working capital efficiency. Continual monitoring and analysis of these ratios will be essential to assess the company's operational performance and 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 | 89.38 | 133.61 | 114.30 | 217.26 | 70.66 |
| Days of sales outstanding (DSO) | days | 42.15 | 40.33 | 67.33 | 74.07 | 39.56 |
| Number of days of payables | days | 51.69 | 55.15 | 72.09 | 155.46 | 45.23 |
The activity ratios for Fortune Brands Innovations Inc. provide insights into the company's efficiency in managing its working capital and operations.
1. Days of Inventory on Hand (DOH):
- The trend in DOH indicates that the company has been able to reduce the number of days inventory is held on average. However, there was a significant increase in 2020 which could indicate potential issues with inventory management during that period.
- The lower the DOH, the better, as it implies faster inventory turnover and less capital tied up in inventory. The company's DOH decreased from 217.26 days in 2020 to 89.38 days in 2023, which is a positive sign of improved inventory management efficiency.
2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects how quickly the company collects its accounts receivable. A lower DSO is favorable as it indicates faster collection of receivables.
- The DSO decreased from 74.07 days in 2020 to 42.15 days in 2023, suggesting that the company has been able to improve its credit management and receivables collection processes, leading to faster cash inflows.
3. Number of Days of Payables:
- A longer number of days of payables indicates the company is taking longer to pay its suppliers, which can have positive cash flow implications.
- The company's days of payables increased significantly in 2020 but then decreased again in subsequent years. This fluctuation could be due to changes in payment terms or supply chain dynamics.
Overall, the improving trends in Days of Inventory on Hand and Days of Sales Outstanding, along with the fluctuating but generally stable Number of Days of Payables, suggest that Fortune Brands Innovations Inc. has been effectively managing its working capital and operational efficiency over the years.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.74 | 6.03 | 7.16 | 3.95 | 6.99 |
| Total asset turnover | 0.70 | 0.77 | 0.60 | 0.49 | 0.92 |
Fortune Brands Innovations Inc.'s long-term activity ratios indicate the efficiency with which the company utilizes its assets to generate sales revenue over the years. The fixed asset turnover ratio has decreased from 6.99 in 2019 to 4.74 in 2023, implying that the company is generating less revenue per dollar of fixed assets invested. This may suggest a decline in the utilization of the company's fixed assets and could be a concern for management.
Conversely, the total asset turnover ratio has fluctuated over the years, ranging from 0.49 in 2020 to 0.92 in 2019. The decrease in 2021 to 0.60 followed by a subsequent increase indicates some instability in the company's overall asset utilization efficiency. A low total asset turnover ratio could signal that Fortune Brands is not efficiently using its total assets to generate sales.
Overall, the analysis of long-term activity ratios suggests that Fortune Brands Innovations Inc. may need to review its asset management strategies to improve the efficiency of asset utilization and enhance revenue generation in the long term.