Kadant Inc (KAI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.14 | 5.23 | 4.66 | 5.10 | 5.26 |
| Receivables turnover | 7.38 | 7.10 | 6.88 | 6.67 | 6.86 |
| Payables turnover | 17.57 | 18.95 | 13.14 | 11.55 | 17.43 |
| Working capital turnover | 4.19 | 4.21 | 4.44 | 4.82 | 4.05 |
Kadant Inc's inventory turnover ratio has been relatively stable over the past five years, ranging from 4.66 to 6.14. This indicates that the company efficiently manages its inventory levels, with the ability to turn over its inventory between 4.66 to 6.14 times during the year.
The receivables turnover ratio has shown a consistent increasing trend, from 6.86 in 2020 to 7.38 in 2024. This suggests that Kadant Inc has been collecting its receivables more effectively each year, with a higher turnover rate, indicating good credit management.
In terms of payables turnover, there was some fluctuation in the ratio from 2020 to 2024, varying between 11.55 and 18.95. The higher ratios suggest that the company is taking longer to pay its suppliers, which could indicate a more favorable position in terms of cash flow management.
The working capital turnover ratio has remained relatively stable around 4 over the five-year period. This ratio indicates the efficiency of the company in generating revenue from its working capital. A consistent ratio suggests that Kadant Inc has been utilizing its working capital effectively to generate sales.
Overall, the activity ratios reflect that Kadant Inc has been managing its inventory, receivables, payables, and working capital efficiently over the years, contributing to the company's operational effectiveness and financial performance.
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 | 59.42 | 69.84 | 78.28 | 71.64 | 69.34 |
| Days of sales outstanding (DSO) | days | 49.48 | 51.42 | 53.05 | 54.71 | 53.22 |
| Number of days of payables | days | 20.77 | 19.26 | 27.77 | 31.59 | 20.94 |
Kadant Inc's activity ratios provide insights into how efficiently the company manages its resources and cash flows.
1. Days of Inventory on Hand (DOH):
- The trend in Kadant Inc's DOH shows a slight increase from 2020 to 2022, with a peak in 2022 at 78.28 days before decreasing to 59.42 days in 2024. This indicates that the company held inventory for around 59 to 78 days before selling it during the specified years.
- The increase in DOH from 2022 to 2023 might suggest potential inefficiencies in managing inventory levels, which is later improved by 2024. Kadant Inc should aim to strike a balance between maintaining adequate inventory levels and avoiding excess holding costs.
2. Days of Sales Outstanding (DSO):
- Kadant Inc's DSO sees a general downward trend over the years, implying the company is collecting receivables more quickly. From 2020 to 2024, DSO decreased from 53.22 days to 49.48 days, showcasing an improvement in the efficiency of collecting payments from customers.
- The decreasing trend in DSO indicates enhanced credit control measures or prompt customer payments, which is a positive sign for the company's liquidity and cash flow management.
3. Number of Days of Payables:
- The number of days of payables for Kadant Inc fluctuates over the period, ranging from 19.26 days to 31.59 days. Notably, there is a significant increase in payables days in 2021 compared to 2020, followed by fluctuations in the subsequent years.
- The variations in payables days suggest changes in the company's payment terms with suppliers or its ability to manage payables effectively. It is essential for Kadant Inc to strike a balance between managing payable days to optimize cash flow without straining supplier relationships.
Overall, Kadant Inc should focus on optimizing its inventory levels, maintaining efficient accounts receivable management, and effectively managing payables to improve working capital efficiency and overall operational performance.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.24 | 6.85 | 3.76 | 3.55 | 7.42 |
| Total asset turnover | 0.73 | 0.81 | 0.78 | 0.69 | 0.68 |
The fixed asset turnover ratio measures the efficiency with which a company utilizes its fixed assets to generate sales. In the case of Kadant Inc, the fixed asset turnover ratio has shown some fluctuation over the past five years.
In 2020, the fixed asset turnover ratio was 7.42, indicating that for every dollar invested in fixed assets, Kadant generated $7.42 in sales. However, this ratio declined significantly to 3.55 in 2021, suggesting a decrease in efficiency in utilizing fixed assets for revenue generation.
There was a slight improvement in 2022 and 2023, with fixed asset turnover ratios of 3.76 and 6.85, respectively. This indicates that Kadant was able to improve the utilization of its fixed assets to some extent during these years.
In 2024, the fixed asset turnover ratio decreased to 6.24, which, although lower than the peak in 2023, still demonstrates a relatively efficient utilization of fixed assets to generate revenue.
Turning to the total asset turnover ratio, which measures how efficiently a company uses its total assets to generate revenue, Kadant Inc has shown a somewhat stable trend over the five-year period.
The total asset turnover ratio remained relatively consistent around the range of 0.68 to 0.81 from 2020 to 2024. This indicates that Kadant has been maintaining a fairly stable level of efficiency in generating sales relative to its total assets.
Overall, while the fixed asset turnover ratio for Kadant Inc has shown more variability, the total asset turnover ratio has been more stable. This suggests that the company has been effectively managing its assets to generate revenues, and improvements in the utilization of fixed assets could further enhance its overall operational efficiency.