Innovex International, Inc (INVX)

Short-term

Turnover ratios

The activity ratios of Innovex International, Inc. over the period from 2020 to 2024 reflect fluctuations in inventory management, receivables collection, payables obligations, and overall working capital efficiency.

Inventory Turnover:
The inventory turnover ratio increased from 1.27 in 2020 to 2.25 in 2021, indicating an improvement in inventory management and more frequent inventory cycling. This upward trend continued into 2022, reaching 2.27, suggesting sustained efficiency. However, in 2023 and 2024, the ratio declined to 1.59 and 1.58 respectively, signaling a slowdown in inventory turnover and potentially excessive inventory holdings relative to sales or sluggish sales activity.

Receivables Turnover:
Receivables turnover showed substantial growth from 1.42 in 2020 to 3.57 in 2021, and further increased to 3.70 in 2022, indicating improved collection efficiency and shorter average collection periods. Nevertheless, in 2023, the ratio declined slightly to 3.58 and further to 2.48 in 2024, suggesting a deterioration in receivables collection performance and longer times to convert receivables into cash.

Payables Turnover:
The payables turnover ratio exhibited some volatility but overall increased from 7.21 in 2020 to a peak of 9.12 in 2023, before decreasing to 6.57 in 2024. The rise implies that the company paid its suppliers more frequently or efficiently in 2021 through 2023, whereas the decrease in 2024 indicates a slowdown, possibly extending payment terms or facing cash flow constraints.

Working Capital Turnover:
Working capital turnover improved significantly from 0.47 in 2020 to 2.39 in 2021 and remained relatively stable at 2.37 in 2022. Subsequently, it declined to 0.70 in 2023 and increased again to 1.38 in 2024. This ratio reflects the efficiency with which the company utilizes its working capital to generate sales. The initial sharp increase suggests better utilization, while the subsequent decline in 2023 indicates reduced efficiency, followed by a partial recovery in 2024.

Overall, these activity ratios demonstrate a period of operational efficiency gains following 2020, particularly in receivables and working capital management. However, recent declines, especially in inventory turnover, receivables, and working capital turnover in 2023 and 2024, highlight potential issues with inventory management, collection processes, and asset utilization efficiency. These patterns warrant further investigation to assess underlying operational challenges and their implications for liquidity and profitability.

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Average number of days

The analysis of Innovex International, Inc.'s activity ratios over the five-year period reveals noteworthy trends in inventory management, receivables collection, and payables behavior.

Days of Inventory on Hand (DOH):
The DOH ratio significantly decreased from approximately 287.44 days at the end of 2020 to 162.39 days in 2021, indicating an improvement in inventory turnover and inventory management efficiency during that period. The ratio remained relatively stable in 2022 at around 160.88 days. However, there was a notable increase in 2023 to approximately 230.12 days, followed by a slight rise to 231.16 days in 2024, suggesting a decline in inventory turnover and potentially a buildup of inventory holdings or slower inventory liquidation.

Days of Sales Outstanding (DSO):
There was a considerable reduction in DSO from about 256.54 days in 2020 to 102.34 days in 2021, signaling a substantial improvement in the collection period and receivables management. This efficiency was maintained relatively stable in 2022 at 98.62 days. Nonetheless, the DSO increased modestly in 2023 to around 101.88 days and then more substantially to 147.12 days in 2024, indicating a deterioration in receivables collection efficiency during the latter two years.

Number of Days of Payables:
The payables period increased from approximately 50.61 days in 2020 to 67.45 days in 2021, implying that the company was stretching its payables longer before settling liabilities. In 2022, this ratio decreased to about 49.03 days, suggesting an acceleration in settling payables. However, in 2023, the payables period shortened further to around 40.03 days, indicating quicker payments. In 2024, the ratio shifted upward again to approximately 55.58 days, demonstrating a tendency to lengthen the payable period once more.

Overall, Innovex International, Inc. experienced significant improvements in inventory and receivables management during 2020 to 2022 but faced challenges in maintaining these efficiencies in subsequent years. The inventory days increased notably in 2023 and 2024, indicating potential stockpiling or slower turnover. Similarly, the increased DSO in 2024 reflects a decline in collection efficiency, which could impact cash flow. The fluctuating payable days suggest variable credit management practices, with periods of extended payments followed by shorter settlement cycles. These activity ratios collectively point to evolving operational efficiencies and cash management strategies over the analyzed period.

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Long-term

The long-term activity ratios for Innovex International, Inc. reveal insights into the company's utilization of assets over the period from December 31, 2020, to December 31, 2024. Notably, the fixed asset turnover ratio remains unavailable for all reported years, indicating either a lack of fixed asset investments during this period or that such data was not reported or significant enough to calculate the ratio.

Focusing on the total asset turnover ratio, a notable fluctuation is observed. In 2020, the ratio was significantly low at 0.32, suggesting that the company generated approximately $0.32 in sales for every dollar of total assets, indicating limited efficiency in asset utilization during that year. A marked improvement occurred in 2021, with the ratio increasing substantially to 1.03, implying a more efficient use of assets to generate sales. This positive trend continued into 2022, with the ratio rising slightly to 1.07, reflecting sustained or improved asset efficiency.

However, a decline is evident in 2023, when the total asset turnover ratio dropped to 0.41, nearly halving from the previous year. This decrease could indicate reduced efficiency in generating sales from the assets employed. As of 2024, the ratio improved modestly to 0.55 but remained below the peak levels observed in 2021 and 2022, suggesting a partial recovery in asset utilization, yet not to the highest efficiency levels previously attained.

Overall, the trend in total asset turnover ratios indicates periods of both growth and contraction in asset utilization efficiency. The initial increase from 2020 through 2022 demonstrates the company's capacity to leverage its assets effectively, while the subsequent decline in 2023 raises concerns about potential operational or strategic shifts impacting asset productivity. The partial recovery in 2024 suggests an attempt to restore or improve asset efficiency, though it has yet to reach the previously high levels. The absence of fixed asset turnover data limits further analysis of fixed asset management, but the overall pattern in total asset turnover offers insight into the company's evolving operational efficiency over the stated period.