Lear Corporation (LEA)

Short-term

Turnover ratios

Lear Corp.'s activity ratios provide insight into how efficiently the company manages its assets and liabilities. The inventory turnover ratio indicates that the company is able to sell and replace its inventory approximately 12 times a year consistently over the past five years. This suggests effective inventory management and a smooth flow of goods.

The receivables turnover ratio reflects how many times a company collects its accounts receivable during a period. Lear Corp.'s ratio has ranged between 5.21 and 6.64 over the past five years, indicating that it collects its receivables quite efficiently, with a slight dip in 2022 followed by a recovery in 2023.

The payables turnover ratio data is missing for all years, making it impossible to evaluate the efficiency of the company's accounts payable management.

Working capital turnover measures how efficiently a company generates revenue relative to its working capital. Lear Corp.'s turnover has been relatively stable, fluctuating between 9.61 and 11.91 over the past five years. This indicates that the company generates sales well compared to its working capital investment.

Overall, Lear Corp.'s activity ratios suggest that the company effectively manages its inventory and receivables while efficiently utilizing its working capital to generate sales. However, additional information on payables turnover would provide a more complete picture of the company's overall efficiency in managing its supply chain and cash flow.

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Average number of days

Days of inventory on hand (DOH) for Lear Corp. have remained relatively stable over the past five years, ranging from 25.41 days in 2019 to 32.10 days in 2021. This indicates that the company holds inventory for an average of around one month to slightly over a month, which could suggest efficient inventory management.

Days of sales outstanding (DSO), on the other hand, have fluctuated over the same period, with a peak of 70.00 days in 2020 and a low of 54.95 days in 2019. The trend seems to show improvement in collection efficiency from 2020 to 2023, which is a positive sign as it indicates the company is collecting receivables more quickly.

Unfortunately, the data provided for the number of days of payables is not available, making it difficult to assess the company's payment terms and relationships with suppliers. The absence of this information prevents a comprehensive analysis of Lear Corp.'s complete activity cycle and its impact on working capital management.

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Long-term

The fixed asset turnover ratio measures the efficiency with which a company is utilizing its fixed assets to generate sales. For Lear Corp., we observe a consistent improvement in the fixed asset turnover ratio over the last five years, indicating that the company has been able to generate more sales revenue per dollar invested in fixed assets. This improvement suggests improved operational efficiency and effective utilization of fixed assets.

On the other hand, the total asset turnover ratio reflects how efficiently the company is utilizing all its assets (both fixed and current) to generate sales. Lear Corp.'s total asset turnover ratio has shown a similar increasing trend over the years, indicating that the company has been able to generate more sales relative to its total assets. This improvement suggests that Lear Corp. has been effectively managing its assets to generate sales revenue, showcasing operational efficiency and effective asset utilization.

Overall, the increasing trend in both fixed asset turnover and total asset turnover ratios for Lear Corp. signifies improved efficiency and effectiveness in utilizing its assets to generate sales, which is a positive indicator of the company's operational performance and management of its asset base.