Franklin Electric Co Inc (FELE)

Short-term

Turnover ratios

Activity ratios provide insight into how effectively a company manages its assets and liabilities to generate sales and support operations. Let's analyze Franklin Electric Co., Inc.'s activity ratios based on the provided data:

1. Inventory Turnover: This ratio indicates how many times a company's inventory is sold and replaced over a specific period. Franklin Electric's inventory turnover has been relatively stable, ranging from 2.21 to 2.69 over the past eight quarters. A higher turnover generally indicates efficient inventory management and could suggest effective sales strategies.

2. Receivables Turnover: This ratio measures how efficiently a company collects its outstanding accounts receivable during a period. Franklin Electric's receivables turnover has fluctuated within a range of 6.79 to 9.28 over the same period. A higher turnover ratio typically signifies effective credit policies and timely collection practices.

3. Payables Turnover: The payables turnover ratio shows how quickly a company pays off its suppliers or trade payables. Franklin Electric's payables turnover has varied between 6.17 and 9.71 in the last eight quarters. A higher ratio might indicate favorable credit terms from suppliers or efficient cash management.

4. Working Capital Turnover: This ratio reveals how efficiently a company uses its working capital to generate sales. Franklin Electric's working capital turnover has shown a decreasing trend from 5.21 to 3.64 over the analyzed quarters. A declining turnover ratio could suggest less efficient utilization of working capital to support revenue generation.

Overall, Franklin Electric Co., Inc. has demonstrated mixed results in its activity ratios over the past eight quarters. The company has maintained a relatively stable inventory turnover and receivables turnover, while payables turnover has fluctuated. However, the decreasing trend in working capital turnover warrants further investigation into the company's operational efficiency and financial management practices.

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Average number of days

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

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows fluctuations, ranging from 135.71 days (Q4 2023) to 165.44 days (Q2 2022).
- The decreasing trend from Q1 2023 to Q4 2023 indicates a more efficient management of inventory levels.
- However, the current DOH levels are relatively high, suggesting a longer time taken to convert inventory into sales.

2. Days of Sales Outstanding (DSO):
- DSO fluctuates over the quarters, with the range between 39.31 days (Q4 2023) to 53.75 days (Q2 2022).
- Lower DSO values in Q4 2023 and Q4 2022 indicate quicker collection of receivables, which is positive for cash flow.
- However, higher DSO in Q2 and Q3 2023 may signal potential issues with credit policies or collection efficiency.

3. Number of Days of Payables:
- The trend in the number of days of payables shows variations, ranging from 37.59 days (Q4 2022) to 59.20 days (Q1 2022).
- Generally, longer payment periods (higher number of days of payables) can signify better cash flow management, but this can also strain relationships with suppliers.
- The data suggests that the company has been managing its payables differently across quarters, potentially impacting cash conversion cycles and working capital management.

Overall, Franklin Electric Co., Inc. should aim to optimize its activity ratios further by efficiently managing inventory levels, enhancing collection processes, and maintaining balanced payment terms with suppliers for improved operational performance and financial health.

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Long-term

The fixed asset turnover ratio for Franklin Electric Co., Inc. has remained relatively stable over the past eight quarters, ranging from 8.31 to 9.57. This indicates that the company is efficient in generating sales revenue from its fixed assets, with an average turnover rate of around 9 times per year.

On the other hand, the total asset turnover ratio fluctuated between 1.06 and 1.21 during the same period. This ratio measures the company's ability to generate sales from all its assets. Despite some variability, the total asset turnover has generally been on an upward trend, reaching a peak of 1.21 in Q3 2023.

Overall, both long-term activity ratios suggest that Franklin Electric Co., Inc. is effectively utilizing its assets to generate sales revenue, with a particular strength in efficiently utilizing its fixed assets to drive revenue. It is important for the company to continue monitoring and managing its asset turnover ratios to sustain its operational efficiency and profitability in the long term.