Landstar System Inc (LSTR)

Short-term

Turnover ratios

Based on the activity ratios provided for Landstar System Inc over the past few quarters, we can observe the following trends:

1. Receivables turnover:
- Landstar System Inc has generally maintained a steady and efficient turnover of receivables over the periods analyzed. The ratio indicates how many times a company collects its average accounts receivable balance during a period.
- The receivables turnover ratio has ranged from 5.41 to 7.68, with a peak in September 2020 and March 2020, and relatively consistent levels in recent quarters.
- A higher receivables turnover indicates that Landstar System Inc is collecting its receivables more frequently, which is a positive sign of effective credit and collection policies.

2. Payables turnover:
- Landstar System Inc has shown fluctuations in its payables turnover ratio over the periods analyzed. The ratio indicates how many times a company pays its average accounts payable balance during a period.
- There was a significant increase in the payables turnover ratio from December 2021 to September 2022 and a gradual decline thereafter.
- A higher payables turnover ratio may suggest that Landstar System Inc is efficiently managing its payments to suppliers, but the significant fluctuations may require further investigation.

3. Working capital turnover:
- The working capital turnover ratio for Landstar System Inc has displayed a decreasing trend over the past few quarters. This ratio measures how effectively a company utilizes its working capital to generate sales.
- The ratio peaked in March 2020 and has since shown a downward trajectory, with occasional fluctuations. A higher turnover ratio is generally desirable as it implies efficient use of working capital.
- The decreasing trend in the working capital turnover may indicate potential inefficiencies in capital utilization or changes in the company's operational dynamics that have impacted working capital efficiency.

Overall, the analysis of Landstar System Inc's activity ratios suggests that the company has effectively managed its receivables turnover, experienced fluctuations in payables turnover, and seen a decreasing trend in working capital turnover. Further investigation into the reasons behind these trends could provide valuable insights into the company's operational efficiency and financial performance.

---

Average number of days

The activity ratios of Landstar System Inc provide insight into the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH): Unfortunately, specific data regarding the days of inventory on hand is not available for the periods indicated. However, it is typically favorable for a company to have a lower number of days of inventory on hand as it indicates efficient management of inventory levels.

2. Days of Sales Outstanding (DSO): The Days of Sales Outstanding has shown some fluctuations over the periods provided. A decrease in DSO indicates that the company is collecting its accounts receivable more quickly, which is generally positive. Landstar System Inc saw a decrease in DSO from 67.49 days in December 2020 to 51.19 days in December 2023.

3. Number of Days of Payables: The number of days of payables has also fluctuated over the periods reviewed. A higher number of days of payables indicates that the company is taking longer to pay its suppliers. Landstar System Inc experienced a significant increase in days of payables from 457.09 days in December 2020 to 475.79 days in March 2021 before gradually decreasing to 94.47 days in December 2023.

Overall, while the Days of Sales Outstanding have shown improvements, there has been volatility in the Number of Days of Payables. It is important for Landstar System Inc to effectively manage its payables to ensure strong supplier relationships while also focusing on the efficient collection of receivables for optimal working capital management.

---

Long-term

Landstar System Inc's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, have shown fluctuations over the past few quarters. The fixed asset turnover, which measures how efficiently the company generates sales from its fixed assets, has generally been increasing since the beginning of 2020, indicating improved efficiency in utilizing its fixed assets to generate revenue.

On the other hand, the total asset turnover, which indicates the company's overall efficiency in generating sales from all assets, has also shown variability but has been relatively stable over the periods under review. It fluctuated between 2.50 and 3.88 during the specified timeframe, indicating Landstar System Inc's ability to generate revenue from its total asset base.

Overall, the trend in both the fixed asset turnover and total asset turnover ratios suggests that Landstar System Inc has been effectively utilizing its assets to generate revenue, with a slight improvement in fixed asset efficiency over time. However, it is essential to continue monitoring these ratios to ensure sustained efficiency in asset utilization and revenue generation.