Forward Air Corporation (FWRD)

Short-term

Turnover ratios

The table provides data for Forward Air Corporation's activity ratios, which measure how efficiently the company manages its assets and liabilities.

1. Inventory turnover:
- The inventory turnover ratio indicates how many times a company sells and replaces its inventory during a period. However, there is missing data for this ratio in the recent years.

2. Receivables turnover:
- The receivables turnover ratio measures how efficiently the company collects cash from its credit sales. Over the past five years, Forward Air Corporation's receivables turnover has ranged from 7.64 to 8.87 times per year, indicating a relatively stable collection efficiency.

3. Payables turnover:
- The payables turnover ratio reflects how efficiently the company pays off its suppliers. Forward Air Corporation's payables turnover has decreased from 42.79 times in 2019 to 10.78 times in 2023. This could suggest a change in payment practices or supplier relationships.

4. Working capital turnover:
- The working capital turnover ratio shows how effectively the company generates revenue from its working capital. Forward Air Corporation's working capital turnover has fluctuated between 12.16 and 17.09 times over the past five years, indicating a moderate level of turnover efficiency.

Overall, Forward Air Corporation has shown stable efficiency in managing its receivables, but a significant decrease in payables turnover may warrant further investigation into the company's working capital management and supplier relations.

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Average number of days

Forward Air Corporation's activity ratios provide insights into how efficiently the company manages its inventory, collects receivables, and pays its suppliers.

- Days of Inventory on Hand (DOH): The company did not provide specific data for DOH for the past three years. However, it is important to note that having too many days of inventory on hand can tie up working capital and increase holding costs, while too few days may lead to stockouts. The trend in DOH should be monitored to ensure optimal inventory management.

- Days of Sales Outstanding (DSO): DSO indicates how long it takes for the company to collect payment from its customers. Over the past five years, DSO has fluctuated between 41.16 days to 47.76 days, with a slight improvement in 2023 to 43.32 days. A lower DSO is generally favorable as it suggests faster cash collection and improved liquidity.

- Number of Days of Payables: This ratio measures how long it takes for the company to pay its suppliers. Forward Air Corporation has shown an increasing trend in the number of days of payables, from 8.53 days in 2019 to 33.84 days in 2023. A higher number of days of payables may indicate the company is taking longer to settle its obligations, which could potentially strain relationships with suppliers.

Overall, the company should focus on optimizing its inventory levels, maintaining a balance between efficient collection of receivables and timely payment of payables to improve working capital management and operational efficiency.

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Long-term

The fixed asset turnover ratio measures the efficiency of a company in generating sales revenue from its fixed assets. For Forward Air Corporation, the trend in fixed asset turnover has been decreasing over the past five years, indicating that the company is generating less revenue from its fixed assets. This could be a cause for concern as it may suggest inefficiencies in asset utilization or a decline in operational productivity.

On the other hand, the total asset turnover ratio reflects how well a company is utilizing all its assets to generate sales. In the case of Forward Air Corporation, the total asset turnover ratio has fluctuated over the years but generally remained relatively low. This trend indicates that the company may not be efficiently using its total assets to generate sales revenue.

Overall, the decreasing trend in fixed asset turnover and the consistently low total asset turnover for Forward Air Corporation may signal potential inefficiencies in asset utilization and a need for the company to improve its operational performance in order to maximize revenue generation from its asset base.