Kennametal Inc (KMT)

Short-term

Turnover ratios

The analysis of Kennametal Inc’s activity ratios over the period reflects several notable trends and stability in operational efficiency.

Inventory Turnover:
The inventory turnover ratio has demonstrated relative stability, fluctuating within a narrow range of approximately 2.31 to 2.77 times per period. The ratio experienced a gradual decline from a high of 2.71 in June 2021 to a low of 2.31 in December 2022, indicating a subtle slowdown in inventory movement and potential accumulation during this interval. Subsequently, it increased again to supersede previous levels, reaching 2.60 in March 2024 and peaking at 2.77 in June 2024 before settling around 2.50 in September 2024 and beyond. These fluctuations suggest periods of improved inventory management interspersed with slight delays.

Receivables Turnover:
The receivables turnover ratio varied between approximately 5.62 and 7.96 times, with a general upward trend from the pandemic-affected lows in early 2021 toward more consistent levels above 6.5. The ratio peaked at 7.96 in December 2024, signifying enhanced efficiency in collecting receivables, while dips below 6.19 in December 2020 and March 2021 reflected temporary challenges or changes in debtor payment behavior. The overall trend indicates a relatively stable receivables collection process with incremental improvements over the analyzed period.

Payables Turnover:
The payables turnover ratio showed a declining trend from a high of 9.52 in December 2020 to a low of approximately 5.99 in June 2022, implying a lengthening of the payables period or slower payments to suppliers during this interval. From mid-2022 onward, there was a modest recovery, with the ratio ascending back toward 7.40 by December 2023, and maintaining close to 7.0–7.2 levels through 2024 and into 2025. This pattern indicates potential strategic adjustments in payable management, balancing between vendor relations and cash flow considerations.

Working Capital Turnover:
The working capital turnover ratios ranged from approximately 3.19 to 3.94 times. The trend suggests gradual stability with slight fluctuations, peaking around 3.94 in September 2022 and trending downward slightly afterward. The ratios imply consistent utilization of working capital to generate sales, with gentle declines indicating either a stabilization in asset utilization efficiency or minor shifts in operational dynamics over time.

Summary:
Overall, Kennametal Inc’s activity ratios depict a company maintaining stable operational efficiency across inventory, receivables, and working capital management, with some periods of acceleration and deceleration. The inventory turnover indicates steady inventory management, while receivables and payables ratios reflect improving collection processes and strategic payment cycle management. The consistency in these ratios points towards effective operational controls, although periodic fluctuations suggest ongoing adjustments in response to internal and external factors.

---

Average number of days

The activity ratios for Kennametal Inc. highlight several trends and patterns over the observed periods, providing insights into the company's operational efficiency and liquidity management.

Days of Inventory on Hand (DOH):
From September 2020 through June 2025, Kennametal’s DOH has generally increased, indicating a tendency to hold inventory for longer periods. Starting at approximately 146 days in September 2020, the DOH gradually rose, peaking at around 158 days in December 2022. Subsequently, the ratio exhibits fluctuations, including a notable decline to approximately 131.77 days in June 2024, before returning to roughly 147.83 days in March 2025. The overall trend suggests periods of inventory accumulation, possibly reflecting strategic inventory build-ups, supply chain considerations, or changes in sales cycle dynamics.

Days of Sales Outstanding (DSO):
The DSO ratio demonstrates relative stability with minor fluctuations over the period. It was approximately 52 days in September 2020, rising to a peak of around 65 days in March 2021, then generally trending downward to about 45-54 days in the subsequent periods. This indicates that the company has maintained a relatively consistent collection period, with minor variations that could reflect changes in credit policies or customer payment behaviors. The reduction in DSO in later periods suggests improved receivables collection efficiency.

Number of Days of Payables:
Kennametal’s payable days show an increasing trend from around 39 days in September 2020 to a high of nearly 61 days in June 2022. After this peak, the ratio stabilizes somewhat, fluctuating around the 49-52 day range. The extended payable period, particularly during 2021 and 2022, may indicate improved bargaining power with suppliers, strategic cash flow management, or delay tactics to optimize working capital. The slight stabilization in recent periods reflects consistent payable practices.

Overall Analysis:
The company’s activity ratios reveal a pattern of increasing inventory holding periods coupled with relatively stable and slightly declining receivable collection times. The trend in payable days suggests strategic management of short-term liabilities. Collectively, these ratios imply an evolving working capital cycle, where inventory management appears to be a focus, possibly to buffer against supply chain disruptions or to meet fluctuating customer demand. The stability in receivables collection points to effective credit management, while the increasing payable days may contribute to liquidity preservation.

Together, these ratios provide a comprehensive view of Kennametal’s operational efficiency, liquidity positioning, and supply chain strategies over the analyzed period.

---

Long-term

The analysis of Kennametal Inc.'s long-term activity ratios reveals trends in the efficiency of utilizing its fixed assets and total assets over the specified periods.

Fixed Asset Turnover Ratio:
The fixed asset turnover ratio exhibits a consistent upward trajectory from September 30, 2020, through September 30, 2023. Starting at 1.68, it gradually increased to 2.17 by the third quarter of 2023. This steady rise indicates an enhanced efficiency in generating sales from the company’s fixed assets, suggesting improvements in operational processes or asset management. The data for late 2023 and early 2024 show a slight fluctuation but remain relatively stable, with values around 2.05 to 2.12, implying the company has maintained or slightly improved its asset utilization efficiency during this period.

Total Asset Turnover Ratio:
Similarly, the total asset turnover ratio displays a steady incremental trend from 0.69 at the end of September 2020 to 0.83 at the end of September 2023. This increase indicates improved overall efficiency in using total assets to generate sales, reflecting possibly better operational leverage or strategic asset management. In early 2024, the ratio remains stable around 0.82 to 0.83, with a slight decline observed in the second quarter of 2025 to 0.77, which could suggest some degree of underutilization or strategic asset changes during that period.

Overall Assessment:
Both ratios demonstrate a positive trend in Kennametal Inc.'s long-term asset utilization efficiency over recent years. The consistent rise in fixed asset turnover indicates effective management of tangible assets in generating sales, while the improvement in total asset turnover suggests a broader enhancement in overall asset efficiency. The stabilization of ratios in late 2023 and early 2024 implies the company has reached a plateau in efficiency gains, with minor fluctuations thereafter. These trends collectively suggest prudent asset management and operational efficiency improvements during the analyzed period.