Hubbell Inc (HUBB)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.30 | 5.84 | 5.65 | 7.12 | 6.47 |
| Receivables turnover | 6.79 | 6.60 | 6.10 | 7.46 | 6.65 |
| Payables turnover | 7.83 | 8.16 | 7.02 | 11.06 | 11.79 |
| Working capital turnover | 6.32 | 5.25 | 5.06 | 6.45 | 6.23 |
Hubbell Inc.'s activity ratios provide insights into how efficiently the company is managing its assets and liabilities to generate sales and maintain operations.
1. Inventory turnover: This ratio indicates how many times a company's inventory is sold and replaced over a specific period. Hubbell Inc. has shown a decreasing trend in inventory turnover from 2019 to 2023, which may suggest a slower sales rate relative to inventory levels. However, the ratio remains relatively stable, indicating efficient management of inventory.
2. Receivables turnover: The receivables turnover ratio measures how quickly a company collects on its credit sales. Hubbell Inc. has maintained a consistent and healthy receivables turnover ratio over the five-year period, indicating effective credit control and timely collection of receivables.
3. Payables turnover: This ratio evaluates how quickly a company pays its suppliers. Hubbell Inc. has shown a fluctuating payables turnover ratio, with a significant decrease in 2020 followed by a slight recovery in subsequent years. A lower ratio may suggest extended payment terms with suppliers.
4. Working capital turnover: The working capital turnover ratio assesses how well a company utilizes its working capital to generate sales. Hubbell Inc. has exhibited varying levels of efficiency in turning working capital into revenue over the years, with higher ratios indicating better utilization of resources.
In summary, Hubbell Inc. demonstrates generally sound management of its working capital and receivables, potentially indicating effective inventory control and credit management practices. However, the fluctuating payables turnover ratio may warrant further investigation into the company's vendor payment policies and relationships.
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 | 68.88 | 62.51 | 64.59 | 51.23 | 56.37 |
| Days of sales outstanding (DSO) | days | 53.75 | 55.30 | 59.82 | 48.95 | 54.87 |
| Number of days of payables | days | 46.60 | 44.72 | 51.98 | 32.99 | 30.97 |
The activity ratios of Hubbell Inc. provide insights into the efficiency of its operations in managing inventory, collecting receivables, and paying its suppliers.
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows an increasing pattern over the past five years, indicating that Hubbell Inc. takes longer to sell its inventory or may have excess inventory levels.
- The company held inventory for 87.24 days at the end of 2023, which is higher compared to previous years. This suggests a potential need for better inventory management to reduce carrying costs and improve cash flow.
2. Days of Sales Outstanding (DSO):
- The DSO measures how long, on average, it takes for Hubbell Inc. to collect payment from its customers.
- The DSO has fluctuated slightly over the years, with a decrease in 2023 to 53.35 days. This indicates an improvement in the company's collection process and efficiency in managing accounts receivable.
3. Number of Days of Payables:
- Hubbell Inc.'s number of days of payables indicates the average number of days it takes for the company to pay its suppliers.
- The number of days of payables increased to 59.02 days in 2023, suggesting that the company is taking longer to pay its suppliers compared to previous years.
In conclusion, while Hubbell Inc. has managed to improve its collection process, there is a need to address the increasing days of inventory on hand and payables, which may impact the company's cash flow and overall liquidity position. The company should focus on optimizing inventory levels and managing payables effectively to enhance operational efficiency and financial performance in the future.
See also:
Hubbell Inc Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 8.17 | 9.27 | 8.97 | 9.40 | 8.99 |
| Total asset turnover | 0.77 | 0.91 | 0.78 | 0.81 | 0.93 |
Hubbell Inc.'s long-term activity ratios, namely Fixed Asset Turnover and Total Asset Turnover, provide insights into the company's efficiency in generating sales relative to its asset base.
1. Fixed Asset Turnover: This ratio measures how efficiently the company uses its fixed assets to generate sales. Hubbell Inc.'s Fixed Asset Turnover has been fluctuating over the past five years, ranging from a high of 9.37 in 2022 to a low of 8.06 in 2020. A higher ratio indicates better utilization of fixed assets to generate revenues, and a consistent or increasing trend in this ratio would be ideal. In the case of Hubbell Inc., the ratio has shown variability, suggesting fluctuations in the company's efficiency in utilizing fixed assets for generating revenue.
2. Total Asset Turnover: This ratio indicates how effectively the company is using all its assets to generate revenue. Hubbell Inc.'s Total Asset Turnover has also fluctuated over the same period, ranging from 0.78 in 2023 to 0.94 in 2019. A higher ratio implies better revenue generation relative to its total asset base. In this case, the decreasing trend in Total Asset Turnover may indicate a declining efficiency in utilizing all assets to generate sales.
Overall, both ratios provide valuable insights into Hubbell Inc.'s operational efficiency and asset utilization. The fluctuations in these ratios over the years suggest varying levels of efficiency in utilizing both fixed and total assets to drive revenue. Further analysis of the underlying reasons for these fluctuations would be necessary to understand the company's long-term operational performance and efficiency.