Franklin Electric Co Inc (FELE)

Short-term

Turnover ratios

Based on the activity ratios of Franklin Electric Co., Inc. over the past five years:

1. Inventory Turnover:
- Franklin Electric's inventory turnover has been relatively stable over the years, ranging from 2.41 in 2021 to 2.95 in 2019. This indicates that, on average, the company is able to sell and replace its inventory approximately 2-3 times per year.

2. Receivables Turnover:
- The company's receivables turnover has shown a consistent improvement from 7.58 in 2019 to 9.28 in 2023. This indicates that the company is collecting its accounts receivable more efficiently, with a higher turnover ratio reflecting quicker collection of sales revenue.

3. Payables Turnover:
- Franklin Electric's payables turnover has been fluctuating, reaching a peak of 10.73 in 2019 and dropping to 6.59 in 2021. This shows variability in the company's payment practices to its suppliers, possibly affecting its liquidity and cash management.

4. Working Capital Turnover:
- The working capital turnover has been declining over the years, from 5.06 in 2021 to 3.64 in 2023. This may suggest that the company's efficiency in generating revenue from its working capital has decreased, potentially indicating a need for more effective management of its current assets and liabilities.

In summary, Franklin Electric Co., Inc. has shown mixed performance in its activity ratios over the years, with improvements in receivables turnover offset by fluctuations in payables turnover and a decline in working capital turnover. Further analysis of the company's operational efficiency and financial management practices may be warranted to identify areas for improvement.

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Average number of days

Activity ratios provide insights into how efficiently a company is managing its assets and operations. Let's analyze the activity ratios of Franklin Electric Co., Inc. based on the data provided:

1. Days of Inventory on Hand (DOH):
- The DOH has been fluctuating over the past five years, ranging from 123.62 days in 2019 to 151.27 days in 2021.
- The increase in DOH from 2020 to 2021 indicates that the company held inventory for a longer period, potentially tying up capital and impacting liquidity.
- A high DOH may suggest suboptimal inventory management, whereas a lower ratio would suggest a faster turnover of inventory.

2. Days of Sales Outstanding (DSO):
- The DSO has shown a decreasing trend over the last five years, indicating that the company has been collecting its accounts receivable more quickly.
- A lower DSO is favorable as it signifies that the company is efficient in converting its credit sales into cash.
- The decreasing trend in DSO reflects stronger credit control and collection policies, enhancing cash flow and liquidity.

3. Number of Days of Payables:
- The number of days of payables has been varying, with an increasing trend from 2019 to 2021 followed by a decrease in 2022 and another increase in 2023.
- An increase in days of payables may signal that the company is taking longer to settle its outstanding payables, potentially indicating better working capital management.
- A decrease in days of payables could suggest that the company is paying its suppliers more quickly, impacting cash flow and financial flexibility.

In summary, the analysis of the activity ratios for Franklin Electric Co., Inc. shows fluctuations and trends in inventory management, accounts receivable collection, and payment practices. Overall, these ratios provide valuable insights into the company's operational efficiency, working capital management, and potential impact on liquidity and cash flow.

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Long-term

The fixed asset turnover ratio reflects how effectively a company is utilizing its fixed assets to generate sales. In the case of Franklin Electric Co., Inc., the fixed asset turnover has generally been strong over the past five years, ranging from 5.97 to 9.50 times. This indicates that the company is generating a high level of sales relative to its investment in fixed assets, with a peak performance in 2022 at 9.50 times turnover.

Total asset turnover, on the other hand, measures how efficiently a company is using all its assets to generate revenue. Franklin Electric Co., Inc.'s total asset turnover has shown a fluctuating pattern, with values ranging from 0.98 to 1.21 times over the same period. The company experienced its highest total asset turnover in 2022 at 1.21 times.

Overall, both the fixed asset turnover and total asset turnover ratios for Franklin Electric Co., Inc. indicate strong operational efficiency and effective utilization of assets to drive sales. However, it is essential to consider other factors and conduct a holistic analysis of the company's financial and operational performance to gain a complete understanding of its long-term activity efficiency.