Harley-Davidson Inc (HOG)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.20 | 4.94 | 6.33 | 7.73 | 7.96 |
| Receivables turnover | 21.84 | 22.82 | 3.24 | 2.45 | 2.12 |
| Payables turnover | 13.84 | 12.44 | 12.04 | 13.90 | 16.33 |
| Working capital turnover | 3.28 | 4.73 | 4.42 | 2.18 | 5.33 |
Inventory turnover measures how effectively a company manages its inventory. Harley-Davidson's inventory turnover has been decreasing over the past five years, from 5.57 in 2019 to 3.82 in 2023. This suggests that the company is selling its inventory less frequently, which may indicate overstocking or slower sales.
Receivables turnover indicates how efficiently a company collects payments from its customers. Harley-Davidson's receivables turnover has fluctuated over the years but has remained relatively high, with a peak of 29.30 in 2021. This indicates that the company has been efficient in collecting payments from its customers.
Payables turnover reflects how quickly a company pays its suppliers. Harley-Davidson's payables turnover has also fluctuated but has generally remained relatively stable. A decreasing trend in payables turnover may indicate that the company is taking longer to pay its suppliers.
Working capital turnover measures how effectively a company utilizes its working capital to generate revenue. Harley-Davidson's working capital turnover has been declining over the years, indicating that the company is generating less revenue per dollar of working capital. This could suggest inefficiencies in utilizing its working capital resources.
Overall, Harley-Davidson's activity ratios reflect varying levels of efficiency in managing inventory, collecting receivables, paying suppliers, and utilizing working capital over the past five years. Investors and analysts may want to further investigate the reasons behind these trends to assess the company's overall performance and financial health.
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 | 70.26 | 73.83 | 57.66 | 47.24 | 45.84 |
| Days of sales outstanding (DSO) | days | 16.71 | 16.00 | 112.70 | 148.78 | 172.35 |
| Number of days of payables | days | 26.38 | 29.35 | 30.33 | 26.25 | 22.36 |
Activity ratios provide valuable insights into how efficiently a company manages its assets and liabilities. Let's analyze the activity ratios of Harley-Davidson, Inc. based on the data provided:
1. Days of Inventory on Hand (DOH): This ratio indicates the average number of days it takes for the company to sell its inventory. A higher DOH may suggest slow-moving inventory or inefficiencies in inventory management. From 2019 to 2023, Harley-Davidson's DOH has been increasing steadily, indicating a longer period of time to clear inventory.
2. Days of Sales Outstanding (DSO): DSO reflects the average number of days it takes for a company to collect its accounts receivable. A lower DSO is favorable as it indicates a faster cash conversion cycle. Harley-Davidson's DSO fluctuated over the years, with a notable increase in 2020 and a subsequent decrease in 2021 and 2023. Overall, the company seems to be collecting its receivables efficiently.
3. Number of Days of Payables: This ratio represents the average number of days it takes for a company to pay its suppliers. A higher number of days of payables suggests that the company is taking longer to settle its payables, potentially benefiting from trade credit terms. Harley-Davidson's days of payables have varied over the years, with a general trend of slight increases from 2019 to 2023.
In conclusion, Harley-Davidson's activity ratios present a mixed picture. While the company seems to be efficiently managing its receivables, there are signs of challenges in inventory management based on the increasing days of inventory on hand. Furthermore, the fluctuating days of payables indicate potential changes in the company's payment policies or relationships with suppliers.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 7.98 | 8.34 | 7.80 | 5.45 | 6.33 |
| Total asset turnover | 0.48 | 0.50 | 0.48 | 0.34 | 0.51 |
Harley-Davidson, Inc.'s long-term activity ratios reflect the efficiency with which the company is utilizing its fixed assets and total assets over the years.
The fixed asset turnover ratio has shown a fluctuating trend from 2019 to 2023, with values ranging between 5.45 and 8.34. A higher fixed asset turnover ratio indicates that the company is generating more sales revenue per dollar of fixed assets invested. The slight decline in 2023 compared to the previous year suggests a slightly reduced efficiency in utilizing fixed assets to generate revenue.
On the other hand, the total asset turnover ratio has also fluctuated over the years, ranging from 0.34 to 0.51. This ratio measures the company's ability to generate sales from all assets, including fixed and current assets. The increase in total asset turnover from 2020 to 2022 followed by a slight decline in 2023 indicates that Harley-Davidson might have improved its efficiency in utilizing assets to generate sales revenue but experienced a slight setback in the latest year.
Overall, while both ratios show variations over the years, the company has generally displayed a relatively efficient use of its fixed and total assets to generate sales revenue. Monitoring these ratios will be crucial for assessing the company's long-term asset management efficiency and its ability to sustain revenue generation.