LCI Industries (LCII)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.92 | 3.82 | 3.13 | 4.23 | 4.66 |
| Receivables turnover | 17.63 | 24.30 | 13.99 | 10.41 | 11.86 |
| Payables turnover | 16.38 | 27.41 | 12.15 | 11.30 | 18.46 |
| Working capital turnover | 5.24 | 5.37 | 4.76 | 6.17 | 5.94 |
The inventory turnover ratio for LCI Industries has exhibited a fluctuating trend over the past five years. It increased from 3.13 in 2021 to 3.92 in 2023, indicating that the company is selling its inventory more quickly in the most recent year.
In contrast, the receivables turnover ratio has shown a general decreasing trend from 24.30 in 2022 to 17.63 in 2023. This suggests that it is taking the company longer to collect payments from its customers.
The payables turnover ratio for LCI Industries has been volatile over the five-year period, with a sharp decrease in 2023 to 16.38 from 27.41 in 2022. This implies that the company is taking longer to pay its suppliers relative to the previous year.
Regarding the working capital turnover ratio, it has been relatively stable around the range of 4.76 to 6.17 over the five years, indicating consistent efficiency in utilizing working capital to generate sales.
Overall, LCI Industries should focus on managing its receivables effectively to improve cash flow, while also ensuring a balanced approach in managing inventory and payables to maintain efficient working capital turnover.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 93.22 | 95.54 | 116.63 | 86.25 | 78.41 |
| Days of sales outstanding (DSO) | days | 20.71 | 15.02 | 26.10 | 35.07 | 30.78 |
| Number of days of payables | days | 22.29 | 13.32 | 30.03 | 32.30 | 19.77 |
Analyzing LCI Industries' activity ratios over the past five years indicates fluctuations in the efficiency of managing inventory, accounts receivable, and accounts payable.
1. Days of Inventory on Hand (DOH):
- The DOH has varied, decreasing from 78.41 days in 2019 to 86.25 days in 2020, and then increasing to 116.63 days in 2021 before dropping to 93.22 days in 2023. This suggests inconsistency in managing inventory turnover and potentially inadequate inventory control in certain periods.
2. Days of Sales Outstanding (DSO):
- The DSO has shown some inconsistency as well, decreasing from 30.78 days in 2019 to 35.07 days in 2020, then improving to 26.10 days in 2021 but increasing to 20.71 days in 2023. This indicates potential challenges in collecting receivables efficiently.
3. Number of Days of Payables:
- The number of days of payables has been fluctuating, with a decrease from 19.77 days in 2019 to 32.30 days in 2020, followed by improvements to 30.03 days in 2021 and further increase to 22.29 days in 2023. This suggests changes in payment terms with suppliers and could impact cash flow management.
Overall, LCI Industries' activity ratios highlight a need for consistent management of inventory, accounts receivable, and accounts payable to optimize working capital efficiency and enhance overall financial performance. Further analysis and monitoring of these ratios are recommended to address any inefficiencies and improve the company's operational effectiveness.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 8.13 | 10.80 | 10.49 | 7.22 | 6.47 |
| Total asset turnover | 1.28 | 1.60 | 1.36 | 1.22 | 1.27 |
LCI Industries' long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into the company's efficiency in managing its assets to generate sales.
The fixed asset turnover ratio has shown a declining trend from 2019 to 2023, indicating that the company is generating fewer sales relative to its investment in fixed assets over the years. While an ideal fixed asset turnover ratio varies by industry, a consistent decrease may suggest that the company's fixed assets are not being utilized as efficiently to generate revenue.
On the other hand, the total asset turnover ratio demonstrates a fluctuating pattern over the same period. It peaked in 2022 and then decreased slightly in 2023. This ratio measures the company's ability to generate sales from its total assets, including both fixed and current assets. A higher total asset turnover ratio indicates effective asset utilization to generate revenue.
Overall, the analysis of these long-term activity ratios suggests that LCI Industries may need to review its fixed asset investment strategies to improve efficiency in generating sales from its assets. Monitoring and potentially optimizing asset usage could help enhance the company's overall financial performance in the future.