Graco Inc (GGG)

Short-term

Turnover ratios

Activity ratios provide insight into how efficiently a company is managing its assets and resources. Let's analyze the activity ratios of Graco Inc based on the provided data:

1. Inventory Turnover: The inventory turnover ratio indicates how many times a company's inventory is sold and replaced over a specific period. Graco Inc's inventory turnover has been relatively stable, ranging from 2.19 to 2.78 over the past years. A decreasing trend in inventory turnover may suggest potential issues with sales or inefficient inventory management.

2. Receivables Turnover: The receivables turnover ratio measures how efficiently a company is collecting on its credit sales. Since the data shows that the receivables turnover ratio is not provided for any period, it is difficult to assess Graco Inc's effectiveness in collecting receivables. A high ratio would indicate quick collection of outstanding payments, while a low ratio may raise concerns about credit and collection policies.

3. Payables Turnover: The payables turnover ratio evaluates how quickly a company pays its suppliers. Similar to receivables turnover, the data does not provide information on Graco Inc's payables turnover ratio. A higher payables turnover ratio could indicate good relationships with suppliers and efficient cash flow management.

4. Working Capital Turnover: The working capital turnover ratio demonstrates how effectively a company utilizes its working capital to generate sales. Graco Inc's working capital turnover has fluctuated between 1.70 and 2.66 during the periods provided. A decreasing trend in this ratio might indicate that the company is not efficiently utilizing its working capital to generate revenue.

Overall, analyzing these activity ratios can help stakeholders assess Graco Inc's operational efficiency, asset management, and liquidity. It is important for the company to further investigate any significant deviations in these ratios to improve its overall financial performance.

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Average number of days

Based on the provided data, Graco Inc's Days of Inventory on Hand (DOH) has shown fluctuations over the years. The company's inventory holding period increased from 136.84 days as of March 31, 2020, to a peak of 166.99 days as of June 30, 2024, indicating that Graco Inc may be experiencing challenges in managing its inventory efficiently. However, there was a slight decrease to 149.07 days by December 31, 2024.

Unfortunately, the information for Days of Sales Outstanding (DSO) and Number of Days of Payables is not available. Without this data, it is challenging to assess Graco Inc's accounts receivable collection efficiency and how long it takes the company to pay its suppliers.

In conclusion, Graco Inc's inventory management may require attention due to the prolonged inventory holding period, as indicated by the increasing trend in Days of Inventory on Hand. Further analysis of accounts receivable and payable turnover would provide a more comprehensive understanding of the company's working capital management.

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Long-term

Graco Inc's fixed asset turnover ratio has shown a declining trend over the years, indicating that the company is generating fewer sales from its fixed assets. From March 31, 2020, to December 31, 2023, the ratio decreased from 4.86 to 2.97. This decline suggests potential inefficiencies in utilizing its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from all its assets. Graco Inc's total asset turnover ratio has been relatively stable, hovering around the range of 0.79 to 0.88 from June 30, 2020, to December 31, 2024. This stability indicates that the company efficiently utilizes its total assets to generate revenue.

Overall, the declining trend in fixed asset turnover ratios raises concerns about the company's efficiency in utilizing its fixed assets, while the stable total asset turnover ratios indicate a consistent performance in generating revenue compared to its total asset base.