Leggett & Platt Incorporated (LEG)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.03 | 4.72 | 4.59 | 4.06 | 5.25 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 0.89 | 7.64 | 5.20 | 6.95 | 7.06 |
Based on the provided data for Leggett & Platt Incorporated, we can analyze activity ratios to assess the company's efficiency in managing its resources.
1. Inventory Turnover:
- Inventory turnover measures how efficiently a company manages its inventory. Leggett & Platt's inventory turnover has fluctuated over the years, ranging from 4.06 to 5.25. A higher turnover ratio indicates that the company is selling its inventory quickly, which is generally favorable for liquidity and cash flow.
2. Receivables Turnover:
- Unfortunately, data for receivables turnover is not available for the years provided. This ratio would have helped in evaluating how effectively the company collects its accounts receivable.
3. Payables Turnover:
- Similarly, payables turnover data is not provided, which could have offered insights into how well the company is managing its payables.
4. Working Capital Turnover:
- The working capital turnover ratio relates net sales to working capital. Leggett & Platt's working capital turnover has varied significantly from 0.89 to 7.64. A higher turnover ratio indicates better utilization of working capital to generate revenue. The sharp fluctuations in this ratio may suggest changes in the company's operating cycle or working capital management efficiency over the years.
In conclusion, while the inventory turnover ratios show some consistency, the absence of data for receivables and payables turnover limits a comprehensive analysis of Leggett & Platt's overall activity efficiency. Nonetheless, the working capital turnover provides some insights into the company's ability to generate revenue relative to its working capital. Fluctuations in these ratios may warrant further investigation into the company's operational and financial management strategies.
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 | 72.57 | 77.28 | 79.44 | 89.86 | 69.59 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
The activity ratios analysis for Leggett & Platt Incorporated based on the provided data reveals the following trends:
1. Days of Inventory on Hand (DOH):
- The company's inventory turnover slowed down from 69.59 days in 2020 to 89.86 days in 2021 before improving to 79.44 days in 2022.
- However, there was a further decrease to 77.28 days in 2023 and a slight uptick to 72.57 days in 2024.
- Generally, a lower DOH indicates better inventory management and efficiency in selling goods.
2. Days of Sales Outstanding (DSO):
- The data does not provide information on DSO, which is typically used to evaluate the efficiency of the company in collecting accounts receivable.
- Without this data, it is challenging to assess the company's effectiveness in converting sales into cash.
3. Number of Days of Payables:
- Similar to DSO, information on the number of days of payables is not available in the provided data.
- This ratio is used to analyze how long it takes for the company to pay its suppliers, affecting cash flow and working capital management.
In conclusion, the analysis of Leggett & Platt Incorporated's activity ratios based on the provided DOH data suggests fluctuations in inventory turnover over the years. However, without data on DSO and the number of days of payables, a comprehensive evaluation of the company's overall efficiency in managing working capital is limited.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 5.32 | 5.21 | 5.45 |
| Total asset turnover | 0.20 | 1.02 | 0.99 | 0.96 | 0.90 |
The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate sales. In the case of Leggett & Platt Incorporated, the trend in the fixed asset turnover ratio over the years shows a slight decline from 5.45 in 2020 to 5.21 in 2021, then an increase to 5.32 in 2022. However, for the years 2023 and 2024, the data is not available.
A fixed asset turnover ratio above 1 indicates that the company is generating more in sales than the value of its fixed assets, which is generally considered positive. In the context of Leggett & Platt, the consistently high fixed asset turnover ratio suggests that the company efficiently utilizes its fixed assets to generate sales revenue.
Total asset turnover ratio, on the other hand, provides an indication of how efficiently a company utilizes its total assets to generate revenue. In the case of Leggett & Platt, the total asset turnover ratio has shown an increasing trend from 0.90 in 2020 to 1.02 in 2023, with a significant decrease to 0.20 in 2024.
The increase in the total asset turnover ratio indicates that the company has been more efficient in generating sales revenue relative to its total assets in recent years. However, the sharp decline in 2024 may raise concerns about the company's asset utilization efficiency in that particular year.
Overall, the analysis of Leggett & Platt's long-term activity ratios suggests that the company has been effectively utilizing its fixed assets to generate sales revenue, while the trend in total asset turnover indicates fluctuating efficiency in utilizing total assets for revenue generation, particularly in the most recent year.