Littelfuse Inc (LFUS)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.00 | 3.50 | 3.65 | 4.77 | 5.24 |
| Receivables turnover | 8.05 | 8.03 | 7.43 | 6.19 | 7.30 |
| Payables turnover | 10.95 | 9.19 | 7.33 | 8.43 | 10.60 |
| Working capital turnover | 2.24 | 2.62 | 2.45 | 1.53 | 1.90 |
Littelfuse Inc's activity ratios provide valuable insights into the efficiency of its operations and management of working capital.
1. Inventory turnover:
- The inventory turnover ratio indicates how many times a company's inventory is sold and replaced in a given period.
- Littelfuse Inc's inventory turnover has been declining over the past five years, from 5.24 in 2019 to 4.00 in 2023. This suggests that the company is selling its inventory at a slower rate.
- A lower inventory turnover could indicate overstocking, slow sales, or poor inventory management.
2. Receivables turnover:
- The receivables turnover ratio measures how efficiently a company is collecting payment from its customers.
- Littelfuse Inc's receivables turnover has been relatively stable, ranging from 6.19 in 2020 to 8.05 in 2023. This indicates that the company is collecting payments from its customers at a consistent pace.
- A higher receivables turnover is generally preferable as it implies faster cash collection and better credit management.
3. Payables turnover:
- The payables turnover ratio reflects how well a company manages its trade credit from suppliers.
- Littelfuse Inc's payables turnover has fluctuated over the years, with a peak of 10.95 in 2023. A higher turnover suggests that the company is paying its suppliers more quickly.
- An increasing payables turnover can signal improved relationships with suppliers or efficient working capital management.
4. Working capital turnover:
- The working capital turnover ratio measures how effectively a company generates revenue from its working capital.
- Littelfuse Inc's working capital turnover has varied, with a peak of 2.62 in 2022 and a low of 1.53 in 2020. The fluctuation indicates changes in the company's ability to generate sales from its current assets.
- A higher working capital turnover ratio generally indicates better efficiency in utilizing working capital to generate revenue.
Overall, although Littelfuse Inc has shown some fluctuations in its activity ratios over the years, it is essential for the company to focus on improving inventory turnover, maintaining stable receivables turnover, and managing payables efficiently to enhance overall operational efficiency and financial performance.
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 | 91.20 | 104.26 | 99.90 | 76.51 | 69.71 |
| Days of sales outstanding (DSO) | days | 45.34 | 45.43 | 49.14 | 59.01 | 50.02 |
| Number of days of payables | days | 33.35 | 39.70 | 49.77 | 43.29 | 34.44 |
Littelfuse Inc's activity ratios indicate the efficiency of the company in managing its inventory, receivables, and payables over the past five years.
1. Days of Inventory on Hand (DOH):
- The trend indicates an increasing level of inventory held by the company from 2019 to 2022, with a slight decrease in 2023. This may suggest challenges in inventory management, leading to potentially higher holding costs and liquidity issues.
2. Days of Sales Outstanding (DSO):
- The DSO remained relatively stable between 45 to 50 days from 2019 to 2023. Although there was a slight decrease in 2023, it is important for the company to monitor and manage its receivables efficiently to ensure timely collection of sales proceeds.
3. Number of Days of Payables:
- The days of payables have fluctuated over the years but remained within a manageable range. The decrease in 2022 compared to 2021 could indicate potential improvements in managing payables. However, the increase in 2023 suggests a need for the company to monitor its payables effectively to optimize cash flows.
Overall, the analysis of Littelfuse Inc's activity ratios highlights the importance of effective working capital management to enhance operational efficiency and maximize profitability. The company should focus on optimizing inventory levels, improving receivables collection processes, and efficiently managing payables to strengthen its financial position.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.69 | 5.12 | 4.67 | 4.18 | 4.28 |
| Total asset turnover | 0.58 | 0.63 | 0.65 | 0.52 | 0.58 |
Littelfuse Inc's long-term activity ratios reflect the efficiency of the company in utilizing its fixed assets and total assets to generate sales. The fixed asset turnover ratio has fluctuated over the past five years, ranging from 4.18 to 5.12, with a decreasing trend in recent years. This indicates that the company's fixed assets are generating sales at a slightly slower rate compared to previous years.
On the other hand, the total asset turnover ratio has also shown variability but has generally remained between 0.52 and 0.65. This ratio measures how efficiently the company is utilizing all its assets to generate revenue. The slight fluctuations in this ratio suggest that overall asset utilization has remained relatively stable over the years.
In conclusion, Littelfuse Inc's long-term activity ratios indicate that the company is effectively using its assets to generate sales, although there has been some variability in performance. Monitoring these ratios over time can help assess the company's operational efficiency and effectiveness in managing its assets to drive revenue growth.