Insteel Industries Inc (IIIN)
Working capital turnover
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 649,188 | 826,832 | 590,601 | 472,618 | 455,713 |
| Total current assets | US$ in thousands | 298,853 | 335,332 | 246,906 | 197,038 | 160,584 |
| Total current liabilities | US$ in thousands | 46,155 | 62,596 | 68,849 | 53,678 | 28,413 |
| Working capital turnover | 2.57 | 3.03 | 3.32 | 3.30 | 3.45 |
September 30, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $649,188K ÷ ($298,853K – $46,155K)
= 2.57
The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate sales revenue. It is calculated by dividing net sales by average working capital. A higher ratio indicates a more efficient use of working capital in generating sales.
Based on the data provided for Insteel Industries, Inc., the working capital turnover has fluctuated over the past five years. In 2023, the working capital turnover ratio was 2.57, which represents a decrease from the previous year. This could indicate a less efficient use of working capital in generating sales compared to the prior period.
In 2022, the ratio was 3.03, showing a slight decrease from the ratio in 2021, which was 3.32. Although the ratio decreased in 2022, it remained relatively high, indicating that the company effectively utilized its working capital to generate sales revenue compared to the previous years.
In 2021, the working capital turnover ratio was 3.32, which was slightly lower than the ratio in 2020 (3.30) and 2019 (3.45). While the ratio in 2021 decreased compared to the previous year, it remained at a relatively high level, suggesting that the company efficiently utilized its working capital to drive sales.
Overall, Insteel Industries, Inc. has shown varying levels of efficiency in utilizing its working capital to generate sales revenue over the past five years. The declining trend in the working capital turnover ratio in recent years may warrant further investigation into the company's working capital management and sales generation strategies to identify opportunities for improvement.
Peer comparison
Sep 30, 2023