Generac Holdings Inc (GNRC)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.97 | 2.74 | 2.67 | 3.20 | 3.38 |
| Receivables turnover | 7.30 | 8.61 | 6.78 | 6.54 | 6.77 |
| Payables turnover | 10.18 | 8.64 | 4.32 | 5.84 | 6.74 |
| Working capital turnover | 3.51 | 3.78 | 5.35 | 2.38 | 3.09 |
Generac Holdings Inc's activity ratios indicate the efficiency of the company in managing its assets and liabilities to generate revenue.
- Inventory turnover has been relatively stable over the past five years, ranging from 2.17 to 2.69. This suggests that the company is able to sell and replace its inventory at a moderate pace. A decreasing trend in recent years may indicate improved inventory management efficiency.
- Receivables turnover has shown fluctuations over the years, with a peak in 2022 and a slight decrease in 2023. The consistently high turnover ratio indicates that the company efficiently collects payments from its customers, reducing the risk of bad debts.
- Payables turnover has also varied, with a notable increase in 2023. The higher turnover reflects that Generac is paying off its suppliers more frequently, which may improve relationships with vendors but could also indicate potential cash flow challenges if payment terms are too short.
- Working capital turnover has been volatile, with a significant increase in 2021 followed by a decline in 2023. A higher turnover ratio signifies that the company is efficiently utilizing its working capital to generate sales. The fluctuation may indicate changes in the company's management of its current assets and liabilities.
Overall, Generac Holdings Inc's activity ratios suggest a mixed performance in managing its resources to drive revenue generation. Further analysis of the trends and comparison with industry benchmarks could provide deeper insights into the company's operational efficiency and financial health.
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 | 122.90 | 133.17 | 136.45 | 114.19 | 107.87 |
| Days of sales outstanding (DSO) | days | 49.97 | 42.41 | 53.86 | 55.80 | 53.95 |
| Number of days of payables | days | 35.87 | 42.27 | 84.42 | 62.51 | 54.14 |
Activity ratios indicate how efficiently a company manages its assets and liabilities to generate sales. Let's analyze Generac Holdings Inc's activity ratios based on the provided data:
1. Days of Inventory on Hand (DOH):
Generac's DOH has fluctuated over the past five years, ranging from 135.46 days in 2019 to 168.59 days in 2022. A higher DOH suggests that inventory is moving more slowly, which can tie up capital and increase holding costs. Therefore, the decreasing trend from 2022 to 2023 (168.59 to 160.37 days) is a positive sign indicating better inventory management efficiency.
2. Days of Sales Outstanding (DSO):
Generac's DSO measures how quickly the company collects payments from its customers. The trend for DSO has been somewhat inconsistent, with variations between 41.78 days in 2022 to 53.37 days in 2021. A decreasing DSO is typically favorable as it suggests quicker cash conversion and improved credit control. Hence, the decrease in DSO from 2021 to 2022 (53.37 to 41.78 days) is a positive indicator of efficient billing and collections.
3. Number of Days of Payables:
Generac's payables period has also shown fluctuations over the years, ranging from 67.98 days in 2019 to 103.52 days in 2021. A longer payables period can indicate better cash flow management but may also strain supplier relationships if extended excessively. The significant decrease from 2021 to 2022 (103.52 to 53.51 days) reflects a potentially improved ability to negotiate favorable credit terms with suppliers.
In summary, Generac Holdings Inc has shown improvements in its activity ratios over the years, particularly in managing inventory levels, collecting receivables more efficiently, and optimizing its payables period. Continued monitoring of these ratios can provide insights into the company's operational effectiveness and financial health.
See also:
Generac Holdings Inc Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.56 | 9.62 | 8.40 | 7.13 | 6.82 |
| Total asset turnover | 0.77 | 0.87 | 0.76 | 0.76 | 0.81 |
Generac Holdings Inc's long-term activity ratios reflect its efficiency in utilizing its fixed assets and total assets to generate sales.
The fixed asset turnover ratio has been fluctuating over the past five years, ranging from 6.72 in 2023 to 9.76 in 2022. This indicates that in 2022, the company generated $9.76 in sales for every $1 of fixed assets it possessed, showcasing a more effective utilization of its fixed assets that year. However, it decreased to 6.72 in 2023, implying a potential decline in efficiency in utilizing fixed assets to generate sales.
On the other hand, the total asset turnover ratio has also been fluctuating, albeit to a lesser extent, with a range from 0.77 in 2021 and 2020 to 0.88 in 2022. This ratio indicates that the company generated $0.88 in sales for every $1 of total assets in 2022, showing a relatively higher efficiency in utilizing total assets to generate revenue during that year. However, this ratio decreased to 0.79 in 2023, suggesting a potential decrease in efficiency in utilizing total assets to generate sales.
Overall, the trend in the fixed asset turnover ratio shows some variability in the company's efficiency in utilizing fixed assets, while the total asset turnover ratio indicates a more stable but slightly declining efficiency in utilizing total assets to generate sales over the five-year period. Further analysis would be needed to understand the factors driving these trends and assess their implications for Generac Holdings Inc's long-term operational performance.