Griffon Corporation (GFF)

Short-term

Turnover ratios

Griffon Corporation's activity ratios provide insights into the efficiency of its operational processes and management of resources.

1. Inventory Turnover: The inventory turnover ratio measures how many times a company sells and replaces its inventory in a given period. Griffon Corporation's inventory turnover has generally been fluctuating but remained healthy over the past five years, indicating effective inventory management.

2. Receivables Turnover: The receivables turnover ratio reflects how efficiently Griffon Corporation collects payments from its customers. The company has consistently maintained a high receivables turnover, suggesting prompt collection of outstanding receivables.

3. Payables Turnover: The payables turnover ratio indicates how quickly Griffon Corporation pays its suppliers. The significant fluctuations in this ratio could imply changes in payment policies or negotiating terms with suppliers over the years.

4. Working Capital Turnover: This ratio assesses how effectively Griffon Corporation utilizes its working capital to generate revenue. The increasing trend in working capital turnover signifies improved efficiency in capital utilization over the years.

Overall, Griffon Corporation's activity ratios indicate a well-managed operational cycle with efficient inventory turnover, receivables collection, and working capital utilization. However, fluctuations in payables turnover may warrant further investigation into the company's vendor management practices and cash flow management strategies.

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Average number of days

Activity ratios are used to measure how efficiently a company manages its assets to generate sales. Let's analyze Griffon Corporation's activity ratios based on the provided data for the five most recent years.

1. Days of Inventory on Hand (DOH):
- The trend for DOH shows a slight improvement in recent years, decreasing from 80.32 days in 2021 to 66.70 days in 2024.
- Griffon Corporation has been able to reduce the number of days it takes to sell its inventory, which indicates better inventory management and potentially lower carrying costs.
- A lower DOH signifies that Griffon is turning over its inventory more quickly, which could lead to improved liquidity and profitability.

2. Days of Sales Outstanding (DSO):
- DSO has been relatively stable over the years, with a minor decrease from 54.46 days in 2020 to 43.55 days in 2024.
- Griffon Corporation has maintained a consistent collection period for its accounts receivable, indicating effective credit management practices.
- A lower DSO suggests that the company is collecting its receivables faster, resulting in improved cash flow and reduced credit risk.

3. Number of Days of Payables:
- The trend for the number of days of payables has been fluctuating over the years, with a notable decrease from 44.18 days in 2021 to 18.71 days in 2024.
- Griffon Corporation has been able to extend its payables period, indicating better cash flow management and potentially improved supplier relationships.
- A higher number of days of payables suggests that the company is taking longer to pay its suppliers, which can lead to more cash available for other operations and investments.

In conclusion, Griffon Corporation has made progress in managing its activity ratios effectively, with improvements in inventory turnover, accounts receivable collection, and payables management. These improvements indicate that the company is operating more efficiently and could potentially lead to enhanced financial performance in the future.

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Long-term

Griffon Corporation's long-term activity ratios reflect the efficiency of the company in utilizing its fixed assets and total assets to generate sales revenue over the past five years.

The fixed asset turnover ratio has been relatively stable, ranging from 8.06 to 9.83, with a slight decrease in the most recent year. This indicates that Griffon Corporation has been successful in generating sales revenue in relation to its investment in fixed assets. A higher fixed asset turnover ratio suggests that the company is effectively utilizing its fixed assets to generate revenue.

In contrast, the total asset turnover ratio has shown fluctuations over the same period, ranging from 0.85 to 1.11. The increase in the total asset turnover ratio from 2020 to 2024 indicates that Griffon Corporation has improved its ability to generate sales relative to its total assets. A higher total asset turnover ratio implies efficient use of all assets, including fixed and current assets, to generate sales revenue.

Overall, the trends in both fixed asset turnover and total asset turnover ratios suggest that Griffon Corporation has been effectively managing its assets to drive sales growth and optimize operational efficiency, particularly in recent years.