Gentex Corporation (GNTX)

Short-term

Turnover ratios

Based on the provided data, let's analyze the activity ratios of Gentex Corporation:

1. Inventory Turnover:
- Gentex Corporation's inventory turnover has seen fluctuations over the years, decreasing from 5.28 in 2020 to 3.87 in 2024. A higher inventory turnover ratio indicates that the company is selling its inventory more efficiently. The downward trend in inventory turnover may suggest either slower sales or excessive inventory levels.

2. Receivables Turnover:
- The receivables turnover ratio for Gentex Corporation has generally shown an increasing trend, rising from 5.93 in 2020 to 7.83 in 2024. A higher receivables turnover ratio indicates that the company is collecting its receivables more quickly. This improvement suggests that Gentex is more efficient in collecting money owed by customers.

3. Payables Turnover:
- Gentex Corporation's payables turnover has decreased from 14.10 in 2020 to 10.04 in 2024. A lower payables turnover may indicate that the company is taking longer to pay its suppliers. However, a lower payables turnover could also result from negotiating better credit terms with suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio for Gentex Corporation has shown some fluctuations, peaking at 3.17 in 2023. This ratio reflects how effectively the company is using its working capital to generate sales. A higher working capital turnover ratio indicates better efficiency in generating revenue with the available working capital.

In conclusion, while Gentex Corporation has shown improvements in receivables turnover and working capital turnover, the company's inventory turnover has declined, and payables turnover has shown mixed trends. Further analysis and comparison with industry standards would provide a better understanding of Gentex Corporation's overall efficiency in managing its working capital and operational activities.

---

Average number of days

Gentex Corporation's activity ratios provide insights into the efficiency of its inventory management, accounts receivable collection, and accounts payable.

1. Days of Inventory on Hand (DOH):
- The DOH measures the number of days the company holds inventory before selling it.
- Gentex's DOH has shown an increasing trend from 69.11 days in 2020 to 94.27 days in 2024.
- This trend indicates that the company is holding onto inventory for a longer period, possibly due to slow sales or overproduction.
- Higher DOH values may tie up working capital and increase holding costs, which can impact profitability.

2. Days of Sales Outstanding (DSO):
- The DSO metric reflects the average number of days it takes for the company to collect revenue from its customers.
- Gentex has exhibited a decreasing trend in DSO from 61.60 days in 2020 to 46.60 days in 2024.
- A lower DSO implies faster cash collection, which can improve liquidity and working capital management.
- The decreasing trend indicates that Gentex has been more efficient in collecting payments from customers over the years.

3. Number of Days of Payables:
- This ratio represents the average number of days it takes for the company to pay its suppliers.
- Gentex's number of days of payables has fluctuated over the years, from 25.89 days in 2020 to 36.35 days in 2024.
- An increase in days of payables may suggest that the company is taking longer to settle its payables, potentially indicating supplier negotiation strategies or liquidity concerns.
- Managing payables effectively can help improve cash flow and working capital efficiency.

Overall, analyzing these activity ratios for Gentex Corporation reveals trends in inventory management, accounts receivable collection, and accounts payable that can impact the company's operational efficiency and financial performance.

---

Long-term

Long-term activity ratios provide insights into how efficiently a company is utilizing its assets to generate revenue.

1. Fixed Asset Turnover: This ratio measures how effectively a company is using its fixed assets to generate sales. Gentex Corporation's Fixed Asset Turnover ratio has shown a fluctuating trend over the past five years, increasing from 3.61 in 2020 to 3.73 in 2021, but then slightly decreasing to 3.49 in 2022. It increased slightly to 3.52 in 2023 but declined to 3.18 in 2024. Overall, the company generally maintained a ratio above 3, indicating that Gentex efficiently generated sales using its fixed assets.

2. Total Asset Turnover: This ratio assesses the company's ability to generate revenue from all its assets. Gentex Corporation's Total Asset Turnover ratio exhibited an increasing trend over the same five-year period, rising from 0.77 in 2020 to 0.84 in 2024. This indicates that the company has been successful in generating higher revenues relative to its total assets. The peak Total Asset Turnover ratio of 0.88 in 2023 suggests that Gentex was particularly efficient in utilizing its assets to generate sales during that year.

Interpretation: The analysis of Gentex Corporation's long-term activity ratios reveals that the company has generally been efficient in utilizing both fixed assets and total assets to generate revenue. The fluctuations in the fixed asset turnover ratio may indicate changes in the company's asset utilization efficiency over the years, whereas the increasing trend in the total asset turnover ratio suggests an improving efficiency in generating sales from all assets as a whole.