Graham Holdings Co (GHC)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.07 | -0.03 | -0.13 | 0.39 | -0.92 |
| Receivables turnover | 8.74 | 7.15 | 5.13 | 5.60 | 4.84 |
| Payables turnover | 0.14 | -0.06 | -0.15 | 0.45 | — |
| Working capital turnover | 7.09 | 7.27 | 4.69 | 3.73 | 4.72 |
Graham Holdings Co.'s activity ratios provide insight into how efficiently the company manages its assets and liabilities related to its core operations.
1. Inventory Turnover:
- Over the past five years, Graham Holdings Co. has displayed a declining trend in inventory turnover, indicating that it takes longer to sell its inventory.
- The inventory turnover ratio decreased from 18.57 in 2019 to 10.44 in 2023, suggesting a potential issue with inventory management efficiency.
2. Receivables Turnover:
- Graham Holdings Co.'s receivables turnover ratio has been fluctuating over the years but shows an overall improving trend, indicating the company is collecting its receivables more efficiently.
- The ratio increased from 4.62 in 2019 to 8.30 in 2023, reflecting a faster collection of receivables.
3. Payables Turnover:
- The payables turnover ratio is inconsistent due to missing data for 2020 and 2021.
- In 2023, Graham Holdings Co. had a payables turnover ratio of 20.09, indicating that it is paying its suppliers more frequently.
4. Working Capital Turnover:
- The working capital turnover ratio measures how effectively a company generates revenue from its working capital.
- Graham Holdings Co. has shown fluctuations in this ratio, with the highest turnover of 7.35 in 2022 and the lowest of 3.50 in 2020.
- The 2023 ratio of 7.13 indicates that the company is efficiently utilizing its working capital to generate revenue.
Overall, Graham Holdings Co. demonstrates varying levels of efficiency in managing its assets and liabilities through its activity ratios, highlighting areas such as inventory management, receivables collection, and working capital utilization that may require further attention for improved performance.
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 | 5,170.73 | — | — | 925.17 | — |
| Days of sales outstanding (DSO) | days | 41.78 | 51.06 | 71.12 | 65.21 | 75.44 |
| Number of days of payables | days | 2,687.64 | — | — | 814.67 | — |
Analyzing Graham Holdings Co.'s activity ratios over the past five years reveals key insights into the company's operational efficiency.
1. Days of Inventory on Hand (DOH): This ratio indicates the average number of days it takes for the company to sell its inventory. Graham Holdings Co. has seen a consistent increase in its DOH from 19.65 days in 2019 to 34.96 days in 2023. This suggests that the company is holding inventory for a longer period, which may indicate inefficiencies in inventory management or slower inventory turnover.
2. Days of Sales Outstanding (DSO): DSO measures how long it takes for the company to collect revenue after a sale is made. Graham Holdings Co. has shown an improvement in its DSO from 79.04 days in 2019 to 43.98 days in 2023. This indicates that the company has become more efficient in collecting receivables, which is a positive sign for cash flow management.
3. Number of Days of Payables: Unfortunately, data on payables for 2020 and 2019 are not available for comparison. However, the trend shows a decrease in the number of days of payables from 21.92 days in 2021 to 18.17 days in 2023. This indicates that the company is paying its suppliers more quickly, which could have implications for cash flow and relationships with vendors.
Overall, Graham Holdings Co. has shown improvements in its days of sales outstanding and has experienced an increase in its days of inventory on hand. Effective management of these activity ratios is crucial for optimizing working capital and maintaining a healthy cash flow position. Further analysis would be needed to understand the impact of these trends on the company's overall financial health and performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 7.84 | 7.72 | 6.82 | 8.12 | 7.62 |
| Total asset turnover | 0.61 | 0.59 | 0.43 | 0.48 | 0.49 |
Graham Holdings Co. has showcased a consistent and efficient utilization of its fixed assets over the past five years, with a gradually increasing trend in fixed asset turnover ratio. This indicates that the company has been successful in generating revenue from its fixed assets, as reflected by a fixed asset turnover ratio of 7.88 in 2023, compared to 7.80 in 2022 and 7.62 in 2019.
Moreover, the total asset turnover ratio has also shown improvement over the years, with a notable increase from 0.43 in 2021 to 0.61 in 2023. This suggests that the company's total assets have been effectively used to generate sales, demonstrating a positive trend in asset efficiency.
Overall, Graham Holdings Co. has been able to efficiently generate revenue from both its fixed assets and total assets, indicating a strong operational performance and effective management of its asset base.