Generac Holdings Inc (GNRC)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Inventory turnover	3.44	3.13	2.96	2.91	2.97	2.68	2.47	2.58	2.74	2.67	2.89	2.64	2.67	2.80	3.11	3.30	3.20	3.42	3.27	3.17
Receivables turnover	7.01	6.25	6.55	7.63	7.35	6.68	7.33	8.70	8.66	8.37	6.36	6.62	6.79	6.67	6.58	6.51	6.56	5.75	6.77	6.99
Payables turnover	7.73	8.08	8.39	9.02	10.18	8.91	7.81	8.71	8.64	7.26	5.83	4.67	4.32	4.29	4.57	5.49	5.84	6.69	7.72	6.65
Working capital turnover	4.30	3.91	3.50	3.44	3.54	3.11	2.97	3.34	3.80	3.76	3.34	4.63	5.36	3.76	3.70	2.43	2.39	2.48	2.70	3.00

Based on the provided data on Generac Holdings Inc activity ratios, let's analyze the key ratios:

1. Inventory Turnover: This ratio measures how efficiently the company manages its inventory. The trend shows a slight increase from March 2020 to December 2020, with a peak in September 2021 and a subsequent decline. While the ratio fluctuated, it generally remained around 3, indicating that inventory was turned over approximately 3 times during the year.

2. Receivables Turnover: This ratio reveals how quickly the company collects on its credit sales. The ratio fluctuated with a noticeable increase from September 2022 to December 2022, indicating improved efficiency in collecting receivables. However, the ratio declined in subsequent periods but remained above 6, suggesting that receivables were collected approximately 6 to 8 times annually.

3. Payables Turnover: This ratio reflects how efficiently the company pays its suppliers. There was a decreasing trend from March 2020 to December 2024, indicating a lengthening of the payment period to suppliers. The ratio declined from around 7 in March 2020 to below 8 in December 2024, suggesting that payables turnover slowed over the period.

4. Working Capital Turnover: This ratio evaluates how effectively the company utilizes its working capital to generate revenue. The ratio fluctuated over the periods, with a significant peak in December 2021. It indicates that the company generated revenue equal to 3 to 5 times its working capital during the year.

Overall, the analysis of Generac Holdings Inc's activity ratios suggests varying levels of efficiency in managing inventory, collecting receivables, paying suppliers, and utilizing working capital over the analyzed period. The company should focus on improving inventory management and payables turnover to enhance operational efficiency and profitability.

Average number of days

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Days of inventory on hand (DOH)	days	106.16	116.45	123.36	125.51	122.90	136.28	147.72	141.42	133.17	136.83	126.42	138.46	136.45	130.22	117.35	110.46	114.19	106.60	111.72	115.12
Days of sales outstanding (DSO)	days	52.07	58.35	55.73	47.83	49.65	54.65	49.78	41.97	42.14	43.58	57.36	55.11	53.72	54.71	55.45	56.03	55.62	63.48	53.89	52.25
Number of days of payables	days	47.20	45.15	43.50	40.48	35.87	40.97	46.76	41.91	42.27	50.28	62.57	78.08	84.42	85.12	79.93	66.48	62.51	54.55	47.25	54.90

Generac Holdings Inc's activity ratios provide insights into the efficiency of its operations.

1. Days of Inventory on Hand (DOH):
- Generac's DOH has shown some fluctuations over the years, ranging from a low of 106.16 days at the end of December 2024 to a high of 147.72 days by June 2023.
- Increasing DOH may indicate excess inventory levels, which could tie up working capital and indicate potential issues with demand forecasting or production efficiencies.
- The company should aim to manage its inventory levels effectively to avoid excessive carrying costs and potential obsolescence.

2. Days of Sales Outstanding (DSO):
- DSO measures how long it takes for Generac Holdings Inc to collect its accounts receivable.
- The trend in DSO has been relatively stable, with fluctuations within a reasonable range. A lower DSO indicates faster collections from customers, which is positive for cash flow management.
- The company has maintained DSO figures around 50-60 days over the years, which is a good sign of efficient credit management and timely collection practices.

3. Number of Days of Payables:
- The number of days of payables for Generac has seen some variance, with a decreasing trend from about 85 days in September 2021 to around 45 days by the end of December 2024.
- A decreasing trend in payables days could suggest improved supplier relationships or negotiating favorable credit terms.
- However, a significant reduction in payables days may also indicate potential cash flow challenges or strained relationships with suppliers, as delaying payments excessively can harm relationships.

In conclusion, Generac Holdings Inc should focus on optimizing its inventory management, maintaining efficient accounts receivable collections, and balancing its payable days to ensure healthy working capital management and sustainable operations.

Long-term

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Fixed asset turnover	6.22	6.44	6.42	6.56	6.60	7.69	7.85	8.70	9.68	10.09	9.88	9.11	8.42	8.26	8.06	8.08	7.15	7.13	6.88	6.90
Total asset turnover	0.84	0.79	0.78	0.77	0.78	0.76	0.74	0.82	0.88	0.87	0.80	0.78	0.76	0.83	0.85	0.82	0.76	0.77	0.79	0.82

Generac Holdings Inc's fixed asset turnover ratio has shown a generally upward trend from March 31, 2020 to June 30, 2022, indicating that the company has been more efficient in generating sales revenue relative to its investment in fixed assets during this period. However, the ratio started to decline from March 31, 2023 onwards. This may signal a decrease in the company's ability to utilize its fixed assets to drive revenue, possibly due to changes in the business environment or operational inefficiencies.

On the other hand, the total asset turnover ratio fluctuated over the same period but remained relatively stable around 0.80, indicating that Generac Holdings Inc has been able to utilize its total assets efficiently to generate sales. The slight increase in the ratio towards the end of the period may suggest improved asset utilization.

Overall, while the company's fixed asset turnover ratio showed some fluctuation, the total asset turnover ratio remained relatively steady, indicating a consistent level of asset utilization efficiency over the analyzed period.