Hubbell Inc (HUBB)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.54 | 5.30 | 5.84 | 5.65 | 7.12 |
| Receivables turnover | 7.44 | 6.79 | 6.60 | 6.10 | 7.46 |
| Payables turnover | 8.61 | 7.83 | 8.16 | 7.02 | 11.06 |
| Working capital turnover | 6.90 | 6.32 | 5.25 | 5.06 | 6.45 |
Based on the provided data for Hubbell Inc, let's analyze the activity ratios:
1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently a company is managing its inventory. A higher ratio indicates better inventory management. Hubbell Inc's inventory turnover has declined from 7.12 in 2020 to 5.54 in 2024. This suggests that the company is taking longer to sell its inventory, which could indicate potential issues such as overstocking or declining sales.
2. Receivables Turnover:
- Receivables turnover ratio measures how efficiently a company collects cash from its credit customers. A higher ratio signifies faster collection of accounts receivable. Hubbell Inc's receivables turnover has fluctuated, with an increase from 7.46 in 2020 to 7.44 in 2024. This indicates that the company is collecting cash from credit sales effectively.
3. Payables Turnover:
- Payables turnover ratio measures how quickly a company pays its suppliers. A higher ratio suggests that the company is managing its payables efficiently. Hubbell Inc's payables turnover has fluctuated but remained relatively stable over the years, indicating consistent payment practices towards suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate revenue. A higher ratio indicates better utilization of resources. Hubbell Inc's working capital turnover has fluctuated, with a decrease from 6.45 in 2020 to 6.90 in 2024. This suggests that the company is generating more revenue with its working capital over the years.
In summary, while Hubbell Inc has seen fluctuations in its activity ratios over the years, the company's management of receivables and payables appears relatively stable. However, there may be opportunities for improvement in inventory management efficiency and working capital utilization to enhance overall operational effectiveness.
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 | 65.85 | 68.88 | 62.51 | 64.59 | 51.23 |
| Days of sales outstanding (DSO) | days | 49.08 | 53.75 | 55.30 | 59.82 | 48.95 |
| Number of days of payables | days | 42.37 | 46.60 | 44.72 | 51.98 | 32.99 |
Hubbell Inc's activity ratios provide insights into how efficiently the company manages its inventory, sales, and payables.
1. Days of Inventory on Hand (DOH):
- The trend of DOH shows an increase from 51.23 days in 2020 to 65.85 days in 2024, indicating that Hubbell Inc is holding inventory for a longer period.
- A higher DOH may suggest possible overstocking or slower inventory turnover, leading to potential liquidity and storage cost concerns.
2. Days of Sales Outstanding (DSO):
- DSO shows a fluctuating trend from 48.95 days in 2020 to 49.08 days in 2024, with a peak at 59.82 days in 2021, indicating the time it takes for the company to collect its receivables.
- Lower DSO is favorable as it signifies faster cash conversion from credit sales and efficient credit management.
3. Number of Days of Payables:
- The company's payables days trended upwards initially from 32.99 days in 2020 to 51.98 days in 2021, then decreased to 42.37 days in 2024, with fluctuations in between.
- A higher number of days of payables suggests that Hubbell Inc is taking longer to pay its suppliers, potentially indicating better cash flow management but could also signal strained supplier relationships.
Overall, Hubbell Inc should focus on optimizing its inventory management, improving receivables collection efficiency, and maintaining a balance in payables management to enhance its working capital effectiveness and overall operational efficiency.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 7.74 | 8.17 | 9.27 | 8.97 | 9.40 |
| Total asset turnover | 0.84 | 0.77 | 0.91 | 0.78 | 0.81 |
Based on the provided data for Hubbell Inc, let's analyze the long-term activity ratios:
1. Fixed Asset Turnover: This ratio measures how efficiently the company is utilizing its fixed assets to generate sales. Hubbell Inc's fixed asset turnover has shown a fluctuating trend over the years. It was highest in 2020 at 9.40 and has gradually decreased to 7.74 by the end of 2024. A higher fixed asset turnover ratio indicates better utilization of fixed assets to generate revenue.
2. Total Asset Turnover: This ratio reflects the company's ability to generate sales from its total assets. Hubbell Inc's total asset turnover has varied over the years, ranging from 0.77 in 2023 to 0.91 in 2022. A higher total asset turnover ratio signifies that the company is efficiently using its assets to generate revenue.
Overall, the analysis of these activity ratios for Hubbell Inc suggests that while there have been fluctuations in the efficiency of asset utilization over the years, the company has demonstrated a reasonable ability to generate sales in relation to its fixed and total assets. Further investigation into the factors affecting these ratios would be needed to provide a more detailed assessment of the company's operational efficiency and performance.