Insteel Industries Inc (IIIN)

Short-term

Turnover ratios

The activity ratios of Insteel Industries, Inc. indicate the efficiency of the company's management in utilizing its resources and managing its working capital.

1. Inventory Turnover:
In 2023, the inventory turnover ratio improved significantly to 5.65, indicating that the company sold and replaced its inventory 5.65 times during the year. This suggests efficient management of inventory levels and a decrease in excess stock.

2. Receivables Turnover:
The receivables turnover ratio remained relatively stable over the years, with a slight increase to 10.24 in 2023. This indicates that the company collected its receivables 10.24 times during the year, reflecting efficient management of credit sales and collection processes.

3. Payables Turnover:
The payables turnover ratio increased to 17.00 in 2023, signaling that the company improved its ability to pay its suppliers, reflecting effective cash management and maintaining strong supplier relationships.

4. Working Capital Turnover:
The working capital turnover ratio decreased to 2.57 in 2023, implying a decrease in the efficiency of utilizing working capital to generate sales compared to the previous year. Despite this, the company's working capital turnover remains at a respectable level, suggesting effective management of working capital resources.

Overall, Insteel Industries, Inc. has shown improvements in inventory and payables turnover, indicating better management of inventory levels and supplier payments. The stability in receivables turnover also demonstrates effective credit management. The slight decline in working capital turnover should be further analyzed to ensure the efficient utilization of working capital.

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Average number of days

Insteel Industries, Inc.'s activity ratios indicate its efficiency in managing inventory, collecting receivables, and paying off liabilities. The days of inventory on hand (DOH) decreased significantly from 114.60 days in 2022 to 64.59 days in 2023, possibly indicating more efficient inventory management. However, the DOH was relatively consistent in the prior years, staying within a narrow range.

The days of sales outstanding (DSO) slightly decreased from 36.04 days in 2022 to 35.66 days in 2023, suggesting a marginally improved collection of receivables. This is generally a positive trend that indicates the company is collecting revenue from sales more effectively.

On the other hand, the number of days of payables decreased from 27.13 days in 2022 to 21.47 days in 2023. A shorter payable period means the company is paying its obligations more quickly, which may put pressure on its cash flow. It's important to note that days of payables can be impacted by various factors, including vendor relationships and industry norms.

Overall, the changes in these activity ratios suggest that Insteel Industries, Inc. has improved its inventory management and collection of receivables, but is paying its obligations more quickly. This could potentially reflect a more efficient use of resources, but careful monitoring is needed to ensure it doesn't strain the company's liquidity.

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Long-term

The long-term activity ratios for Insteel Industries, Inc. have shown consistent trends over the past five years. The fixed asset turnover ratio has fluctuated but generally increased from 4.34 in 2019 to 5.41 in 2023, indicating that the company is generating more sales for each dollar invested in fixed assets. This suggests improved efficiency in utilizing its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio has shown a mixed trend, with a peak of 1.75 in 2022 and a low of 1.40 in 2020, before reaching 1.45 in 2023. This indicates that the company's overall efficiency in generating sales from its total assets has been somewhat volatile but remained relatively stable over the years.

In summary, Insteel Industries, Inc. has demonstrated improving efficiency in generating sales from its fixed assets, while the efficiency of its total asset utilization has shown some fluctuations. Overall, these ratios suggest that the company has been effectively utilizing its assets to generate revenue, although there may be room for improvement in the overall asset turnover.