Gates Industrial Corporation plc (GTES)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.03 | 3.42 | 3.51 | 3.13 | 3.46 |
| Receivables turnover | 4.54 | 4.47 | 4.33 | 4.78 | 3.86 |
| Payables turnover | 5.02 | 4.83 | 4.91 | 4.21 | 4.21 |
| Working capital turnover | 2.15 | 2.20 | 2.33 | 2.44 | 2.37 |
Gates Industrial Corporation plc's activity ratios provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital.
1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company's inventory is sold and replaced over a period. Gates Industrial Corporation plc's inventory turnover has been relatively stable over the past five years, ranging from 3.03 to 3.51. This indicates that the company efficiently manages its inventory and is able to sell and replace it within a reasonable timeframe.
2. Receivables Turnover:
- The receivables turnover ratio shows how efficiently a company collects payments from its customers. Gates Industrial Corporation plc's receivables turnover has shown a consistent improvement over the years, increasing from 3.86 in 2020 to 4.54 in 2024. This suggests that the company has been effective in collecting payments from its customers more quickly.
3. Payables Turnover:
- The payables turnover ratio reflects how efficiently a company pays its suppliers or vendors. Gates Industrial Corporation plc's payables turnover has also shown a slight improvement over the years, increasing from 4.21 in 2020 to 5.02 in 2024. This indicates that the company is able to manage its trade payables effectively and may have negotiated favorable payment terms with its suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales. Gates Industrial Corporation plc's working capital turnover has gradually decreased from 2.37 in 2020 to 2.15 in 2024. A declining trend in this ratio may indicate that the company is becoming less efficient in utilizing its working capital to generate revenue.
Overall, based on the activity ratios analysis, Gates Industrial Corporation plc seems to be managing its inventory, receivables, and payables efficiently, but there may be a need for the company to focus on improving its working capital turnover to increase operational efficiency and optimize its use of resources.
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 | 120.38 | 106.83 | 103.97 | 116.69 | 105.50 |
| Days of sales outstanding (DSO) | days | 80.46 | 81.65 | 84.37 | 76.40 | 94.56 |
| Number of days of payables | days | 72.69 | 75.55 | 74.41 | 86.60 | 86.65 |
Based on the provided data, let's analyze the activity ratios of Gates Industrial Corporation plc:
1. Days of Inventory on Hand (DOH):
- The average number of days it takes for Gates Industrial Corporation to sell its inventory increased from 105.50 days in 2020 to 120.38 days in 2024.
- This indicates that the company is holding onto its inventory for a longer period, which may tie up working capital and increase storage costs.
2. Days of Sales Outstanding (DSO):
- Gates Industrial Corporation's Days of Sales Outstanding decreased from 94.56 days in 2020 to 80.46 days in 2024.
- A lower DSO suggests that the company is collecting its receivables more quickly, which is a positive sign of efficient credit management and liquidity.
3. Number of Days of Payables:
- The Number of Days of Payables decreased from 86.65 days in 2020 to 72.69 days in 2024.
- A decrease in payables days indicates that Gates Industrial Corporation is taking fewer days to pay its suppliers, which could potentially strain supplier relationships but can also improve cash flow management.
In summary, Gates Industrial Corporation plc has seen a mixed performance in its activity ratios. While there has been an increase in days of inventory on hand, there have been improvements in days of sales outstanding and number of days of payables. Further analysis combining these ratios with other financial metrics would provide a more comprehensive view of the company's operating efficiency and working capital management.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.91 | 5.69 | 5.61 | 5.22 | 3.98 |
| Total asset turnover | 0.50 | 0.49 | 0.49 | 0.46 | 0.38 |
The Fixed Asset Turnover ratio of Gates Industrial Corporation plc has shown a positive trend over the years, increasing from 3.98 in 2020 to 5.91 in 2024. This indicates that the company is generating more revenue for each unit of fixed assets it owns, reflecting efficient utilization of its long-term assets.
Similarly, the Total Asset Turnover ratio has also shown an upward trajectory, rising from 0.38 in 2020 to 0.50 in 2024. This suggests that Gates Industrial Corporation plc is utilizing its total assets more effectively to generate sales, highlighting an improvement in the company's overall asset management efficiency over the years.
Overall, these trends in both Fixed Asset Turnover and Total Asset Turnover ratios demonstrate the company's ability to generate sales relative to its long-term and total assets, indicating effective asset utilization and operational efficiency.