Leggett & Platt Incorporated (LEG)

Short-term

Turnover ratios

Activity ratios provide insight into how efficiently a company is managing its assets and liabilities. Let's analyze Leggett & Platt, Inc.'s activity ratios:

1. Inventory Turnover:
- Leggett & Platt's inventory turnover has been relatively stable over the past five years, ranging from 4.06 to 5.81 times.
- The current inventory turnover of 4.72 indicates that the company sells and replaces its inventory approximately 4.72 times a year, which suggests that its inventory management has been consistent.

2. Receivables Turnover:
- The receivables turnover ratio has shown a slight decrease from 8.03 in 2019 to 7.41 in 2023.
- This indicates that the company collects its accounts receivables approximately 7.41 times a year, which is still at a reasonably efficient level.

3. Payables Turnover:
- Leggett & Platt's payables turnover ratio has fluctuated over the years, with a high of 8.04 in 2022 and a low of 6.13 in 2020.
- The current payables turnover of 7.22 indicates that the company pays its suppliers approximately 7.22 times a year, which suggests efficient management of payables.

4. Working Capital Turnover:
- The working capital turnover ratio has shown some variability, with a significant increase in 2023 to 7.64 from 5.20 in 2022.
- This ratio indicates how effectively the company is using its working capital to generate revenue, with the current ratio of 7.64 implying that Leggett & Platt is utilizing its working capital efficiently.

Overall, Leggett & Platt, Inc. has shown relatively stable and efficient management of its inventory, receivables, payables, and working capital over the past five years based on the activity ratios analyzed.

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Average number of days

Activity ratios provide insights into how efficiently a company is managing its assets and liabilities to generate sales revenue. Let's analyze Leggett & Platt, Inc.'s activity ratios based on the provided data.

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows fluctuations over the years, ranging from 62.78 days in 2019 to 89.86 days in 2021, before decreasing to 77.28 days in 2023.
- A higher DOH indicates that inventory is held for a longer period before being sold, potentially tying up capital. Leggett & Platt's inventory management improved from 2021 to 2023, which may have resulted in better working capital management.

2. Days of Sales Outstanding (DSO):
- DSO measures how long it takes for the company to collect its accounts receivable. Leggett & Platt's DSO ranged from 45.46 days in 2019 to 49.23 days in 2023, with a peak in 2021 at 46.88 days.
- A lower DSO signifies faster collection of receivables, indicating effective credit and collection policies. Leggett & Platt's DSO remained relatively stable over the years, suggesting a consistent approach to managing receivables.

3. Number of Days of Payables:
- The trend in the number of days of payables shows fluctuations, ranging from 45.38 days in 2022 to 59.53 days in 2020.
- A longer period of payables indicates efficient use of trade credit, allowing the company to hold onto cash for a longer time. Leggett & Platt's payables management varied over the years, possibly due to changes in supplier relationships or payment policies.

Overall, Leggett & Platt, Inc. has demonstrated varying levels of efficiency in managing its inventory, receivables, and payables over the past five years. The company's focus on optimizing these activity ratios can lead to improved liquidity, working capital management, and overall operational efficiency. Further analysis and comparison with industry benchmarks could provide additional insights into the company's performance in this aspect.

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Long-term

The long-term activity ratios for Leggett & Platt, Inc., specifically the fixed asset turnover and total asset turnover ratios, provide insights into how efficiently the company is utilizing its assets to generate sales revenue during the periods from December 31, 2019, to December 31, 2023.

1. Fixed Asset Turnover:
The fixed asset turnover ratio measures the company's ability to generate revenue from its investments in fixed assets. A higher ratio indicates that the company is effectively utilizing its fixed assets to generate sales. In this case, Leggett & Platt, Inc. experienced fluctuations in its fixed asset turnover ratio over the past five years, ranging from 5.45 in 2020 to 6.66 in 2022. The ratio decreased slightly to 6.05 in 2023, suggesting a slight decline in the efficiency of utilizing fixed assets to generate sales revenue compared to the peak in 2022. Overall, the company has maintained a relatively high level of efficiency in utilizing its fixed assets over the years, as indicated by the ratios consistently above 5.

2. Total Asset Turnover:
The total asset turnover ratio reflects the company's overall efficiency in generating sales from all its assets, both fixed and current. A higher total asset turnover ratio indicates that the company is generating more revenue per dollar of assets. Leggett & Platt, Inc. saw fluctuations in its total asset turnover ratio over the five-year period, varying from 0.90 in 2020 to 1.02 in 2023. The increase in the total asset turnover ratio from 2020 to 2023 suggests that the company has improved its efficiency in generating sales revenue relative to its total asset base. This improvement indicates that Leggett & Platt, Inc. has effectively utilized its assets to generate sales growth.

In summary, Leggett & Platt, Inc. has demonstrated efficiency in utilizing both fixed and total assets to generate sales revenue, as evidenced by the generally high levels of fixed asset turnover and the increasing trend in total asset turnover over the analyzed period. These ratios suggest that the company has effectively managed its assets to drive revenue growth and maximize its operational efficiency.