Frontdoor Inc (FTDR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | — | — | 32.72 | — | 42.94 |
| Receivables turnover | 296.67 | 332.40 | 228.86 | 294.80 | 124.09 |
| Payables turnover | 11.78 | 11.90 | 12.39 | 13.78 | 14.31 |
| Working capital turnover | 55.62 | — | — | 6.61 | 14.07 |
Inventory turnover information is not provided in the data table. Turning to receivables turnover, it shows a decreasing trend from 124.09 in 2019 to 296.67 in 2023. This indicates that Frontdoor Inc. is collecting its receivables more effectively in recent years.
On the other hand, payables turnover has also been on a declining trend from 14.31 in 2019 to 11.78 in 2023. This suggests that the company is taking longer to pay its suppliers which could potentially strain its relationship with them.
Moreover, the working capital turnover has shown fluctuating trends, with a significant increase from 2019 to 2020, indicating that the company improved its efficiency in utilizing its working capital. However, the data for 2022 is missing, making it difficult to assess the overall trend accurately.
In summary, Frontdoor Inc. has shown improvements in receivables turnover and working capital turnover over the years, indicating better management of its accounts receivables and working capital. However, the decreasing trend in payables turnover might need further investigation to assess its impact on the company's relationships with suppliers and overall working capital management.
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 | — | — | 11.16 | — | 8.50 |
| Days of sales outstanding (DSO) | days | 1.23 | 1.10 | 1.59 | 1.24 | 2.94 |
| Number of days of payables | days | 30.99 | 30.67 | 29.45 | 26.48 | 25.50 |
The activity ratios for Frontdoor Inc. provide insights into the efficiency of its operations in managing inventory, collecting receivables, and paying suppliers.
1. Days of Inventory on Hand (DOH): Unfortunately, there is no data provided for the Days of Inventory on Hand for Frontdoor Inc. across the years under review. This ratio would have indicated how many days it takes for the company to turn its inventory into sales. A lower DOH would generally be preferred as it indicates that the company is selling its inventory quickly.
2. Days of Sales Outstanding (DSO): Frontdoor Inc. has shown a fluctuating trend in its Days of Sales Outstanding over the past five years. In 2022, the DSO decreased to 1.10 days from 1.59 days in 2021, indicating an improvement in the collection of accounts receivable. However, in 2019, the DSO spiked to 2.94 days, suggesting a slower collection period. A lower DSO is favorable as it indicates that the company is efficiently collecting payments from customers.
3. Number of Days of Payables: The number of days of payables for Frontdoor Inc. has shown an increasing trend over the years. In 2023, the company took approximately 31 days to pay its suppliers, compared to around 26 days in 2020. A longer period of payables may indicate that the company is effectively managing its cash flow by delaying payments to suppliers. However, it could also indicate strained relationships with suppliers if payment terms are extended too far.
Overall, while the DSO trend shows improvement in receivables collection, Frontdoor Inc. needs to ensure that it optimizes inventory turnover efficiently and manages its payables effectively to maintain a healthy working capital cycle.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 29.67 | 25.18 | 24.27 | 24.57 | 26.76 |
| Total asset turnover | 1.63 | 1.54 | 1.50 | 1.05 | 1.09 |
The long-term activity ratios of Frontdoor Inc., including the Fixed Asset Turnover and Total Asset Turnover, provide insights into the company's efficiency in utilizing its assets over the years.
1. Fixed Asset Turnover:
- The Fixed Asset Turnover ratio indicates how efficiently a company generates sales revenue from its investment in fixed assets.
- Frontdoor Inc. has shown a consistent improvement in its Fixed Asset Turnover ratio from 2019 to 2023, with a significant increase from 26.76 in 2019 to 29.67 in 2023.
- This trend suggests that the company has been increasingly effective in generating revenue from its investment in fixed assets over the years, indicating improved asset utilization.
2. Total Asset Turnover:
- The Total Asset Turnover ratio reflects the company's ability to generate sales revenue from its total assets.
- Frontdoor Inc. has also displayed a positive trend in its Total Asset Turnover ratio, with a gradual increase from 1.09 in 2019 to 1.63 in 2023.
- This improvement indicates that the company has become more efficient in utilizing its total assets to generate sales revenue, showcasing enhanced operational efficiency and effectiveness in asset management.
Overall, the increasing trends in both the Fixed Asset Turnover and Total Asset Turnover ratios suggest that Frontdoor Inc. has been successful in maximizing the productivity of its assets and enhancing its overall operational performance over the years.