Lincoln Electric Holdings Inc (LECO)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.66 | 4.82 | 3.73 | 4.01 | 4.68 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 5.23 | 4.47 | 5.34 | 6.06 | 4.72 |
Based on the provided data, let's analyze the activity ratios of Lincoln Electric Holdings Inc:
1. Inventory Turnover:
- The inventory turnover ratio indicates how efficiently a company manages its inventory. It measures the number of times inventory is sold and replaced during a specific period.
- The trend shows a slight decrease in inventory turnover from 2020 to 2024, with the ratio decreasing from 4.68 to 4.66. This indicates that the company might be holding inventory for a slightly longer period before selling it.
2. Receivables Turnover:
- The receivables turnover ratio measures how effectively a company collects its accounts receivable during a period.
- The data shows that the company did not have specific information available for receivables turnover for the years 2020 to 2024. This could imply that the company either has a very low accounts receivable turnover, or this data is not readily accessible.
3. Payables Turnover:
- The payables turnover ratio indicates how quickly a company pays its suppliers.
- Similar to receivables turnover, the data does not provide information on payables turnover for the years 2020 to 2024. This lack of data makes it challenging to assess how quickly the company pays its suppliers.
4. Working Capital Turnover:
- Working capital turnover measures how efficiently a company utilizes its working capital to generate sales.
- The trend in working capital turnover shows fluctuations over the years, with the ratio peaking in 2021 at 6.06 and dipping to 4.47 in 2023 before slightly recovering to 5.23 in 2024. This indicates variations in the company's ability to generate sales using its working capital efficiently.
In conclusion, the analysis of Lincoln Electric Holdings Inc's activity ratios reveals fluctuating trends in inventory turnover and working capital turnover, while information on receivables turnover and payables turnover is not available to assess the efficiency of accounts receivable collection and supplier payment cycles.
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 | 78.31 | 75.70 | 97.92 | 91.00 | 78.00 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Based on the provided data for Lincoln Electric Holdings Inc, let's analyze the activity ratios:
1. Days of Inventory on Hand (DOH):
- The company's inventory turnover has been fluctuating over the years. In 2020, they held inventory for an average of 78 days, which increased to 91 days in 2021, peaked at 97.92 days in 2022, then decreased to 75.7 days in 2023, and slightly rose to 78.31 days in 2024.
- The increase in DOH from 2020 to 2022 may indicate slower inventory turnover, potentially tying up more capital in inventory. The subsequent decrease in 2023 suggests an improvement in inventory management efficiency, which was partially reversed in 2024.
2. Days of Sales Outstanding (DSO):
- Unfortunately, the data provided does not include information on the Days of Sales Outstanding (DSO). DSO is a key metric to assess how efficiently a company is collecting its accounts receivable. Without this data, we cannot evaluate their receivables management performance.
3. Number of Days of Payables:
- Similar to DSO, the information on the number of days of payables is not provided. The payables turnover ratio, usually calculated based on this data, would have allowed us to assess how long on average the company takes to pay its suppliers.
In conclusion, based on the given data, we have insights into Lincoln Electric Holdings Inc's inventory management over the years but lack information on their accounts receivable and accounts payable management. Each of these activity ratios provides valuable insights into a company's operational efficiency and cash flow management.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 6.90 | 6.32 | 5.09 |
| Total asset turnover | 1.14 | 1.24 | 1.18 | 1.25 | 1.15 |
Lincoln Electric Holdings Inc's long-term activity ratios reflect its efficiency in utilizing its assets to generate sales revenue.
1. Fixed Asset Turnover: This ratio measures how efficiently the company is using its fixed assets to generate sales. The trend shows improvement over the years, increasing from 5.09 in 2020 to 6.90 in 2022. This indicates that the company has been able to generate more sales per dollar invested in fixed assets. However, the data for 2023 and 2024 is missing.
2. Total Asset Turnover: This ratio indicates how efficiently the company is utilizing all its assets to generate sales. The ratio increased from 1.15 in 2020 to 1.25 in 2021 but then decreased to 1.18 in 2022 before increasing again to 1.24 in 2023 and dropping to 1.14 in 2024. These fluctuations suggest varying levels of efficiency in asset utilization over the years.
Overall, an upward trend in both fixed asset turnover and total asset turnover ratios generally indicates improved efficiency in asset utilization. However, missing data for 2023 and 2024 makes it difficult to provide a complete assessment of Lincoln Electric Holdings Inc's long-term activity ratios in those years.