Gentex Corporation (GNTX)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.15 | 3.55 | 3.88 | 5.28 | 5.13 |
| Receivables turnover | 7.14 | 6.94 | 6.93 | 5.93 | 7.90 |
| Payables turnover | 9.05 | 9.47 | 12.46 | 14.10 | 13.10 |
| Working capital turnover | 3.17 | 2.75 | 2.50 | 2.11 | 2.39 |
Inventory turnover measures how efficiently a company manages its inventory. Gentex Corp.'s inventory turnover has shown some fluctuations over the past five years but has generally remained above 3, indicating that the company is able to sell and replace its inventory multiple times during the year.
Receivables turnover reflects how quickly a company collects on its credit sales. Gentex Corp.'s receivables turnover has been relatively stable, with a slight increase in 2023 compared to 2022. This indicates that the company is efficient in collecting payments from its customers.
Payables turnover measures how quickly a company pays its suppliers. Gentex Corp.'s payables turnover has decreased over the years, likely indicating that the company is taking longer to pay its suppliers, which could be a strategy to optimize cash flow.
Working capital turnover shows how effectively a company utilizes its working capital to generate revenue. Gentex Corp.'s working capital turnover has been on an upward trend, indicating that the company is generating more revenue for each dollar of working capital employed.
Overall, Gentex Corp. appears to be managing its activity ratios efficiently, with a good balance between managing inventory, collecting receivables, and optimizing working capital turnover. Investors and stakeholders may view these ratios positively as they indicate effective management of operational activities.
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 | 88.03 | 102.68 | 94.17 | 69.11 | 71.09 |
| Days of sales outstanding (DSO) | days | 51.09 | 52.59 | 52.67 | 61.60 | 46.22 |
| Number of days of payables | days | 40.33 | 38.53 | 29.28 | 25.89 | 27.86 |
Activity ratios help measure how efficiently a company manages its assets and liabilities in generating sales.
1. Days of Inventory on Hand (DOH):
- Gentex Corp.'s DOH has varied over the past five years, with a slight increase in 2023 compared to 2022. This suggests that the company held its inventory for 95.60 days on average in 2023 before selling it, indicating a longer time to convert inventory into sales. It is crucial for the company to assess and optimize its inventory management processes to avoid tying up excess capital in unsold goods.
2. Days of Sales Outstanding (DSO):
- The DSO metric shows how efficiently Gentex Corp. collects its accounts receivable. In 2023, the company took an average of 51.09 days to collect payment from its customers. This represents a slight decrease from 2022. Lower DSO indicates faster cash conversion and better working capital management. However, Gentex Corp. should continually monitor and improve its credit policies to maintain a reasonable DSO.
3. Number of Days of Payables:
- The number of days of payables measures how long it takes for Gentex Corp. to pay its suppliers. In 2023, the company had an average of 43.80 days of payables outstanding. This figure increased slightly from 2022 but remained higher than in 2021. A longer payment period can benefit cash flow but may strain supplier relationships if not managed carefully. Gentex Corp. should strike a balance between optimizing cash flow and maintaining healthy vendor partnerships.
Analyzing these activity ratios collectively helps assess Gentex Corp.'s operational efficiency and liquidity. Monitoring these metrics over time can provide insights into the company's ability to manage working capital effectively and sustain operational performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.52 | 3.49 | 3.73 | 3.61 | 3.73 |
| Total asset turnover | 0.88 | 0.82 | 0.81 | 0.77 | 0.86 |
The long-term activity ratios of Gentex Corp. provide insight into how efficiently the company is utilizing its fixed assets and total assets to generate sales over consecutive years.
Firstly, the fixed asset turnover ratio, which measures the efficiency of the company in generating sales from its fixed assets, has been relatively stable over the past five years, ranging between 3.49 and 3.73 times. This indicates that Gentex Corp. has been effectively utilizing its fixed assets to generate revenue, with a slight fluctuation in efficiency from year to year.
Secondly, the total asset turnover ratio, which assesses how well the company is using all of its assets to generate sales, demonstrates a similar trend. The ratio has shown an increasing trend from 0.77 in 2020 to 0.88 in 2023, signifying improved efficiency in utilizing its total assets to generate revenue over the years.
Overall, Gentex Corp. appears to be efficiently utilizing both its fixed assets and total assets to generate sales, with the total asset turnover ratio showing a more notable improvement compared to the fixed asset turnover ratio over the analyzed period. This suggests that the company has been able to effectively manage its assets to drive revenue growth and improve operational efficiency.