Lindsay Corporation (LNN)

Short-term

Turnover ratios

Lindsay Corporation's activity ratios provide insights into the efficiency of its operations and management of working capital.

1. Inventory turnover: This ratio indicates how effectively the company is managing its inventory levels. A decreasing trend over the past five years (from 3.07 in 2020 to 2.69 in 2024) suggests that the company may be holding onto inventory for longer periods, which could tie up capital and lead to potential obsolescence or carrying costs.

2. Receivables turnover: The increasing trend in receivables turnover from 5.61 in 2020 to 5.21 in 2024 indicates that the company is collecting its accounts receivable more efficiently. A higher turnover ratio reflects a quicker collection period, which can improve cash flow and reduce the risk of bad debts.

3. Payables turnover: The payables turnover ratio measures how quickly the company pays its suppliers. Lindsay Corporation's payables turnover has been fluctuating over the past five years, with a peak in 2024 at 11.12. A higher turnover ratio suggests that the company is paying its suppliers more quickly, which may improve relationships but could also indicate potential liquidity challenges.

4. Working capital turnover: This ratio assesses how effectively the company is utilizing its working capital to generate sales. The decreasing trend from 2.04 in 2021 to 1.65 in 2024 suggests a decline in the efficiency of working capital utilization. A lower ratio may indicate suboptimal management of working capital, potentially leading to inefficiencies in operations.

In summary, Lindsay Corporation should focus on optimizing its inventory management, maintaining efficient accounts receivable collection, and carefully managing trade payables to ensure optimal cash flow and working capital utilization for sustainable growth.

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Average number of days

Activity ratios provide insight into how efficiently a company manages its assets and liabilities. Let's analyze the activity ratios of Lindsay Corporation based on the provided data:

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, inventory is held before being sold.
- Lindsay Corporation's DOH has been increasing over the past five years, indicating that inventory turnover has been slowing down.
- A high DOH could signal excess inventory or potential obsolescence, which may tie up working capital and impact liquidity.

2. Days of Sales Outstanding (DSO):
- The DSO metric reveals how long it takes for the company to collect payments from customers after a sale.
- Lindsay Corporation's DSO has fluctuated over the five years, with a noticeable increase in 2024 compared to 2023.
- High DSO may suggest credit terms are overly lenient or difficulties in collecting receivables, potentially affecting cash flow and working capital management.

3. Number of Days of Payables:
- This ratio indicates the number of days it takes the company to pay its suppliers.
- Lindsay Corporation's days of payables have shown a decreasing trend over the five years.
- A lower number of days of payables could indicate a more efficient use of trade credit or potential pressure on vendors for early payments.

Overall, analyzing these activity ratios can help identify operational efficiency and potential areas for improvement within the supply chain and working capital management of Lindsay Corporation.

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Long-term

Lindsay Corporation's long-term activity ratios exhibit fluctuating trends over the past five years. The fixed asset turnover ratio has ranged from 5.38 to 8.16, indicating the company's ability to generate sales from its fixed assets. The highest turnover ratio was observed in 2022, suggesting efficient utilization of fixed assets to generate revenue.

On the other hand, the total asset turnover ratio has ranged from 0.80 to 1.08 during the same period. This ratio measures Lindsay Corporation's overall efficiency in generating sales from all its assets. A higher total asset turnover ratio signifies better asset utilization to generate revenue. However, the ratio decreased from 2022 to 2023 before rising again in 2024, indicating fluctuations in the company's overall asset efficiency over the years.

In conclusion, Lindsay Corporation's long-term activity ratios reflect varying levels of efficiency in utilizing fixed and total assets to generate sales. Further analysis and comparison with industry benchmarks may provide additional insights into the company's operational performance and asset management strategies.