Huntington Ingalls Industries Inc (HII)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.20 | 6.18 | 5.81 | 6.11 | 7.10 |
| Receivables turnover | 27.73 | 17.79 | 13.25 | 14.83 | 16.48 |
| Payables turnover | 1.81 | 2.08 | 1.66 | 1.63 | 2.12 |
| Working capital turnover | 48.67 | — | — | 26.24 | 42.94 |
The activity ratios of Huntington Ingalls Industries Inc indicate how efficiently the company manages its assets and operations.
1. Inventory Turnover: The inventory turnover ratio measures how many times a company sells and replaces its inventory during a period. Huntington Ingalls Industries Inc's inventory turnover has decreased from 7.10 in 2020 to 5.20 in 2024. A lower inventory turnover may suggest slower sales or excess inventory on hand, which could tie up working capital.
2. Receivables Turnover: The receivables turnover ratio shows how efficiently a company collects payment from its customers. Huntington Ingalls Industries Inc's receivables turnover has fluctuated with a peak of 27.73 in 2024. This indicates that the company is collecting payments from customers at a faster rate compared to previous years.
3. Payables Turnover: The payables turnover ratio reflects how quickly a company pays its suppliers. Huntington Ingalls Industries Inc's payables turnover has ranged from 1.63 in 2021 to 2.12 in 2020. A higher payables turnover suggests that the company is managing its payables effectively, possibly by negotiating favorable payment terms with suppliers.
4. Working Capital Turnover: The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate revenue. Huntington Ingalls Industries Inc's working capital turnover was notably high at 48.67 in 2024, indicating that the company is effectively utilizing its working capital to drive sales growth. However, the data for 2022 and 2023 are missing, making it difficult to assess the trend over those years.
In conclusion, Huntington Ingalls Industries Inc should closely monitor its inventory turnover to ensure optimal inventory management, while continuing its efficient collection of receivables and management of payables. The high working capital turnover ratio in 2024 is a positive sign, but further analysis is needed for the missing years to provide a comprehensive assessment of the company's activity ratios.
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 | 70.17 | 59.03 | 62.78 | 59.72 | 51.39 |
| Days of sales outstanding (DSO) | days | 13.16 | 20.52 | 27.56 | 24.60 | 22.15 |
| Number of days of payables | days | 201.73 | 175.83 | 220.23 | 223.67 | 172.56 |
Based on the provided data, we can analyze the activity ratios of Huntington Ingalls Industries Inc for the years 2020 to 2024.
1. Days of Inventory on Hand (DOH):
- The DOH measures the average number of days the company's inventory is held before being sold.
- The trend shows an increase in the DOH from 51.39 days in 2020 to 70.17 days in 2024.
- A higher DOH could indicate slower inventory turnover, potentially tying up more capital in inventory.
2. Days of Sales Outstanding (DSO):
- The DSO metric represents the average number of days it takes for the company to collect payment after a sale is made.
- Huntington Ingalls Industries Inc improved its DSO from 22.15 days in 2020 to 13.16 days in 2024.
- A decreasing trend in DSO indicates the company is collecting payments more efficiently, which can improve cash flow.
3. Number of Days of Payables:
- This metric shows how long the company takes to pay its suppliers.
- The days of payables increased from 172.56 days in 2020 to 201.73 days in 2024.
- A longer payment period could indicate that the company is effectively managing its working capital by delaying payments to suppliers.
In summary, Huntington Ingalls Industries Inc has shown a mixed performance in its activity ratios over the years. The company experienced an increase in inventory holding days but improved its collection efficiency and extended its payment period to suppliers. Efficient management of these activity ratios is crucial for maintaining a healthy working capital position and optimizing cash flow.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.34 | 3.48 | 3.34 | 3.07 | 3.14 |
| Total asset turnover | 0.95 | 1.02 | 0.98 | 0.90 | 1.15 |
Long-term activity ratios provide insights into how efficiently Huntington Ingalls Industries Inc is utilizing its assets over time.
The fixed asset turnover ratio measures the company's ability to generate revenue from its fixed assets. The trend for Huntington Ingalls Industries Inc shows a relatively stable performance, with a slight decline from 3.14 in 2020 to 3.07 in 2021, followed by an increase to 3.48 in 2023 and a subsequent decrease to 3.34 in 2024. Overall, the company seems to be effectively generating sales from its fixed assets, even though there are some fluctuations over the years.
On the other hand, the total asset turnover ratio reflects the company's overall efficiency in generating sales from all its assets. The trend for Huntington Ingalls Industries Inc in this aspect demonstrates more variability, starting at 1.15 in 2020, dropping to 0.90 in 2021, then improving to 1.02 in 2023, and eventually decreasing to 0.95 in 2024. This suggests that the company may have experienced challenges in generating sales relative to its total assets, although there have been moments of recovery.
In conclusion, while the fixed asset turnover ratio for Huntington Ingalls Industries Inc indicates a relatively stable performance in utilizing its fixed assets efficiently, the total asset turnover ratio shows more variability in the company's overall asset efficiency. Monitoring these ratios over time can help assess the company's asset management strategies and identify areas for improvement in long-term activity efficiency.