Hillenbrand Inc (HI)

Short-term

Turnover ratios

Activity ratios measure the efficiency of a company in managing its various operating assets. The analysis of Hillenbrand Inc's activity ratios over the past five years reveals the following trends:

1. Inventory turnover: This ratio indicates how many times a company sells its average inventory balance in a given period. Hillenbrand Inc's inventory turnover has fluctuated over the years, with a downward trend from 2018 to 2020 followed by a slight increase in recent years. The company turned its inventory over 4.05 times in 2024, which is an improvement from the previous year.

2. Receivables turnover: This ratio measures how efficiently a company collects cash from its customers in relation to its accounts receivable balance. Hillenbrand Inc's receivables turnover has also shown variability over the years, but overall, there has been a slight decrease in efficiency from 2018 to 2024. In 2024, the company collected cash from its customers approximately 4.88 times during the year.

3. Payables turnover: The payables turnover ratio reflects how quickly a company pays its suppliers in relation to its accounts payable balance. Hillenbrand Inc's payables turnover has been relatively stable over the years, indicating a consistent payment cycle with suppliers. In 2024, the company paid its suppliers approximately 4.78 times during the year.

4. Working capital turnover: This ratio measures how efficiently a company utilizes its working capital to generate sales. Hillenbrand Inc's working capital turnover has shown an increasing trend over the past five years, indicating improved efficiency in utilizing its working capital. In 2024, the company generated approximately 9.92 times in sales for every dollar of working capital.

In conclusion, while there have been fluctuations in some of the activity ratios, Hillenbrand Inc has generally shown improvement in managing its operating assets efficiently, as evidenced by the overall upward trend in working capital turnover. Monitoring these ratios can provide insights into the company's operational efficiency and effectiveness in managing its resources.

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Average number of days

The activity ratios of Hillenbrand Inc indicate the efficiency of the company's operations in managing inventory, collecting receivables, and paying its suppliers.

1. Days of Inventory on Hand (DOH):
- Hillenbrand Inc has seen fluctuations in its days of inventory on hand over the past five years, with a noticeable increase in 2023 and 2024 compared to the previous years.
- The company held inventory for approximately 90 to 115 days on average, indicating a longer period of time taken to sell its inventory.
- Higher DOH may suggest slower inventory turnover and potential risks of obsolescence or excess inventory.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding for Hillenbrand Inc have also varied over the years, with an increasing trend from 2020 to 2024.
- The company took around 60 to 85 days on average to collect its accounts receivable, indicating the time taken to convert credit sales into cash.
- Increasing DSO may signal difficulties in collecting receivables promptly or potential credit risks associated with customers.

3. Number of Days of Payables:
- Hillenbrand Inc has maintained relatively stable days of payables over the years, with a slight increase in 2024 compared to 2022 and 2023.
- The company paid its suppliers in approximately 58 to 87 days on average, reflecting the credit terms offered by the company's suppliers.
- Longer days of payables may indicate the company's ability to manage its cash flow by delaying payments to suppliers, but it could also strain supplier relationships if extended too far.

Overall, the analysis of Hillenbrand Inc's activity ratios suggests the need for the company to monitor and optimize its inventory management, accounts receivable collection, and payables practices to enhance operational efficiency and working capital management.

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Long-term

Long-term activity ratios provide insights into how efficiently a company utilizes its long-term assets to generate revenue. In the case of Hillenbrand Inc:

1. Fixed Asset Turnover: The fixed asset turnover ratio measures how effectively the company generates sales revenue from its investment in fixed assets. Hillenbrand has shown a significant improvement in this ratio over the past five years, with a notable increase from 7.60 in 2021 to 10.05 in 2024. This indicates that the company is generating more revenue per dollar invested in fixed assets, reflecting improved efficiency in utilizing its long-term assets.

2. Total Asset Turnover: The total asset turnover ratio evaluates the company's ability to generate sales from all its assets, including both short-term and long-term assets. Hillenbrand's total asset turnover has fluctuated over the years, with a notable decrease from 0.63 in 2020 to 0.51 in 2023 before slightly recovering to 0.61 in 2024. Despite the fluctuations, the company's total asset turnover remains below 1, indicating that it generates less revenue relative to its total assets.

Overall, Hillenbrand's fixed asset turnover highlights improved efficiency in utilizing its long-term assets, while its total asset turnover indicates room for further optimization in generating revenue from its total asset base. Monitoring these ratios over time can provide valuable insights into the company's operational efficiency and asset utilization strategies.