Group 1 Automotive Inc (GPI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 8.57 | 11.10 | 11.75 | 7.12 | 6.14 |
| Receivables turnover | 74.50 | 81.01 | 75.41 | 53.84 | 53.15 |
| Payables turnover | 33.69 | 30.86 | 27.53 | 23.92 | 22.15 |
| Working capital turnover | 62.19 | 252.54 | 109.43 | 66.68 | 127.28 |
The activity ratios of Group 1 Automotive, Inc. provide insight into the efficiency of the company in managing its inventory, receivables, payables, and working capital over the past five years.
Inventory turnover has decreased from 2019 to 2020 but has shown an increasing trend since then. The ratio indicates that the company has been able to sell its inventory 7.57 times in 2023, up from 5.38 times in 2019, which suggests improved efficiency in managing and selling inventory.
Receivables turnover has also shown a similar increasing trend, indicating that the company is collecting its receivables more frequently. In 2023, Group 1 Automotive was able to collect its receivables 29.42 times, compared to 25.15 times in 2019, reflecting effective management of accounts receivable.
Payables turnover has been on the rise over the past five years, indicating that the company is taking longer to pay its suppliers. The 2023 ratio of 29.75 suggests that the company is paying its accounts payable more frequently, which may impact relationships with suppliers.
Working capital turnover has fluctuated over the years, with a significant decrease in 2022 followed by an increase in 2023. The ratio of 62.56 in 2023 indicates that Group 1 Automotive is generating sales relative to its working capital at a higher rate compared to the previous year, which could be a positive sign of effective utilization of working capital resources.
Overall, the activity ratios suggest that Group 1 Automotive has shown improvements in inventory and receivables management efficiency over the years, but the increment in payables turnover might raise concerns about the company's payment practices with suppliers. Moreover, the working capital turnover improvement in 2023 indicates a more effective utilization of working capital to generate sales.
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 | 42.60 | 32.88 | 31.07 | 51.27 | 59.40 |
| Days of sales outstanding (DSO) | days | 4.90 | 4.51 | 4.84 | 6.78 | 6.87 |
| Number of days of payables | days | 10.83 | 11.83 | 13.26 | 15.26 | 16.48 |
Group 1 Automotive, Inc.'s activity ratios indicate how efficiently the company manages its inventory, receivables, and payables.
1. Days of Inventory on Hand (DOH) measures the average number of days it takes for the company to sell its inventory. In 2023, the DOH increased to 48.25 days compared to 37.35 days in 2022. This suggests that Group 1 Automotive held inventory for a longer period in 2023, which could tie up capital and potentially increase holding costs.
2. Days of Sales Outstanding (DSO) reflects the average number of days it takes the company to collect its accounts receivable. The DSO decreased to 12.41 days in 2023 from 10.75 days in 2022. A lower DSO indicates that the company collected receivables more efficiently in 2023, which is a positive sign of effective credit management.
3. Number of Days of Payables measures how long the company takes to pay its suppliers. The days of payables decreased to 12.27 days in 2023 from 13.44 days in 2022. A lower number of days of payables suggests that Group 1 Automotive paid its suppliers more quickly in 2023, which could impact cash flows and supplier relationships.
Overall, while the inventory turnover slowed down in 2023, the company improved its collection of receivables and paid its payables sooner. These changes in activity ratios may indicate ongoing efforts by Group 1 Automotive to optimize working capital management and enhance operational efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 8.98 | 8.46 | 7.50 | 6.70 | 7.73 |
| Total asset turnover | 2.28 | 2.40 | 2.33 | 2.12 | 2.15 |
Group 1 Automotive, Inc.'s fixed asset turnover has been relatively stable over the past five years, with a range of 6.75 to 7.95. This ratio indicates that the company generates approximately $7.95 in revenue for every $1 invested in fixed assets in 2023. The consistent high fixed asset turnover suggests that the company efficiently utilizes its fixed assets to generate sales.
On the other hand, the total asset turnover ratio has shown some fluctuations, ranging from 2.13 to 2.41. In 2023, the total asset turnover ratio decreased to 2.30, which indicates that for every $1 of assets, the company generated $2.30 in revenue. This decline in total asset turnover may suggest that the company's efficiency in generating revenue from its total assets decreased slightly in 2023 compared to the previous year.
Overall, both the fixed asset turnover and total asset turnover ratios indicate that Group 1 Automotive, Inc. is effective in utilizing its assets to generate sales, with a particularly strong performance in efficiently utilizing fixed assets for revenue generation.