Generac Holdings Inc (GNRC)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.44 | 2.97 | 2.74 | 2.67 | 3.20 |
| Receivables turnover | 7.01 | 7.30 | 8.61 | 6.78 | 6.54 |
| Payables turnover | 7.73 | 10.18 | 8.64 | 4.32 | 5.84 |
| Working capital turnover | 4.30 | 3.51 | 3.78 | 5.35 | 2.38 |
Generac Holdings Inc's inventory turnover indicates the number of times the company sold and replaced its inventory during the year. The trend shows a slight decrease from 3.20 in 2020 to 2.67 in 2021, then a gradual increase to 3.44 in 2024. This suggests an improvement in managing inventory levels efficiently over the years.
The receivables turnover ratio reflects how efficiently the company collects its accounts receivable. Generac's receivables turnover increased significantly from 6.54 in 2020 to 8.61 in 2022, then slightly decreased to 7.01 in 2024. This indicates an improvement in the company's collection efforts and credit policies in recent years.
Payables turnover ratio measures how many times the company pays its suppliers during a period. Generac's payables turnover decreased from 5.84 in 2020 to 4.32 in 2021, then surged to 10.18 in 2023 before stabilizing at 7.73 in 2024. This suggests changes in payment terms with suppliers or better management of payables.
The working capital turnover ratio gauges the efficiency of utilizing working capital to generate sales. Generac's working capital turnover improved significantly from 2.38 in 2020 to 5.35 in 2021, then fluctuated between 3.51 and 4.30 in the following years. This indicates the company's effective utilization of working capital to drive sales growth during this period.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 106.16 | 122.90 | 133.17 | 136.45 | 114.19 |
| Days of sales outstanding (DSO) | days | 52.07 | 49.97 | 42.41 | 53.86 | 55.80 |
| Number of days of payables | days | 47.20 | 35.87 | 42.27 | 84.42 | 62.51 |
Generac Holdings Inc's activity ratios reflect its efficiency in managing inventory, collecting receivables, and paying its liabilities.
1. Days of Inventory on Hand (DOH):
- The trend for DOH shows an increase from 114.19 days in 2020 to 136.45 days in 2021, indicating a higher level of inventory held by Generac.
- However, there is a slight decrease in DOH over the following years, reaching 106.16 days by the end of 2024.
- Overall, Generac is taking longer to turn its inventory into sales, but the trend in recent years suggests some improvement in managing inventory levels.
2. Days of Sales Outstanding (DSO):
- DSO decreased from 55.80 days in 2020 to 42.41 days in 2022, indicating a more efficient collection of receivables.
- However, there was a slight increase in DSO in 2023 and 2024, suggesting a slower collection of receivables during these periods.
- Generac may need to focus on improving its credit policies or collections processes to reduce DSO and improve cash flow.
3. Number of Days of Payables:
- The trend in the number of days of payables shows some fluctuation but a general decreasing trend from 2020 to 2024.
- The decrease from 84.42 days in 2021 to 35.87 days in 2023 suggests that Generac is paying its suppliers more quickly.
- A lower number of days of payables may indicate good relationships with suppliers but could also impact cash flow management if not balanced properly.
In summary, Generac Holdings Inc has shown mixed performance in its activity ratios over the years, with improvements in inventory turnover and payables management but some challenges in receivables collection. Further analysis and monitoring of these ratios are necessary to ensure effective working capital management and operational efficiency.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.22 | 6.56 | 9.62 | 8.40 | 7.13 |
| Total asset turnover | 0.84 | 0.77 | 0.87 | 0.76 | 0.76 |
The Fixed Asset Turnover ratio for Generac Holdings Inc has shown an increasing trend over the years, indicating the company's ability to generate sales from its fixed assets efficiently. The ratio improved from 7.13 in 2020 to 9.62 in 2022, showcasing a significant enhancement in asset utilization. However, there was a slight decline in 2023 and 2024, with the ratio dropping to 6.56 and 6.22, respectively. This dip suggests a potential decrease in the efficiency of the company's fixed assets in generating revenue during those years.
On the other hand, the Total Asset Turnover ratio remained relatively stable over the period under consideration. It started at 0.76 in 2020 and stayed constant through 2021, indicating that each dollar of total assets generated $0.76 in revenue during these years. In 2022, the ratio increased to 0.87, signaling an improvement in the company's ability to utilize its total assets to generate sales. However, there was a slight decline in 2023, with the ratio dropping to 0.77, before recovering to 0.84 in 2024.
Overall, the Fixed Asset Turnover ratio highlights improvements in the utilization of Generac Holdings Inc's fixed assets, although there were some fluctuations in recent years. Meanwhile, the Total Asset Turnover ratio shows a relatively stable trend, with a noticeable increase in 2022. These ratios collectively provide insights into the company's efficiency in generating revenue from its assets and can aid in assessing its operational performance and asset management strategies.