Mohawk Industries Inc (MHK)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.54 | 4.16 | 4.15 | 4.74 | 4.09 |
| Receivables turnover | 5.89 | 6.13 | 6.05 | 5.55 | 6.51 |
| Payables turnover | 11.16 | 10.61 | 8.08 | 8.93 | 11.30 |
| Working capital turnover | 4.49 | 4.13 | 4.86 | 3.17 | 5.79 |
Mohawk Industries, Inc.'s activity ratios provide insights into the efficiency of the company's operations in managing its assets and liabilities.
1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company's inventory is sold and replaced in a given period. Mohawk's inventory turnover has been relatively stable over the five-year period, ranging from 3.15 to 3.72 times. This indicates that the company effectively manages its inventory levels to support sales activity.
2. Receivables Turnover:
- The receivables turnover ratio reflects how efficiently a company collects on credit sales. Mohawk's receivables turnover has shown some fluctuations over the years but generally remained above 5. This suggests that the company has been able to collect its accounts receivable effectively, turning them into cash multiple times a year.
3. Payables Turnover:
- The payables turnover ratio assesses how quickly a company pays its suppliers. Mohawk's payables turnover has varied over the years, with a noticeable increase in 2021 compared to 2020. However, the ratio has generally been on the higher side, indicating that the company manages its payables well and may have favorable payment terms with its suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio measures how effectively a company is utilizing its working capital to generate revenue. Mohawk's working capital turnover has also fluctuated but has consistently been above 3. This suggests that the company efficiently uses its working capital to support its operations and generate sales.
Overall, Mohawk Industries, Inc. demonstrates strong efficiency in managing its inventory, receivables, payables, and working capital, as indicated by its stable to improving activity ratios over the five-year period.
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 | 80.42 | 87.84 | 87.97 | 76.93 | 89.33 |
| Days of sales outstanding (DSO) | days | 61.96 | 59.57 | 60.32 | 65.77 | 56.08 |
| Number of days of payables | days | 32.71 | 34.40 | 45.19 | 40.89 | 32.29 |
To analyze Mohawk Industries, Inc.'s activity ratios, we will focus on Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.
1. Days of Inventory on Hand (DOH):
- The company's DOH has fluctuated over the past five years, ranging from 98.05 days in 2020 to 115.96 days in 2022.
- In 2023, the DOH decreased to 110.55 days, indicating that the company held inventory for approximately 110.55 days before selling it.
- A decreasing trend in DOH can suggest improved inventory management efficiency as the company is selling inventory faster.
2. Days of Sales Outstanding (DSO):
- Mohawk Industries, Inc.'s DSO has also varied over the years, with the lowest at 55.89 days in 2019 and the highest at 65.32 days in 2020.
- In 2023, the DSO increased to 61.45 days, indicating that the company took around 61.45 days on average to collect its accounts receivable.
- A higher DSO may suggest potential issues with collecting receivables promptly, impacting the company's cash flow.
3. Number of Days of Payables:
- The trend in the days of payables has been inconsistent, with fluctuations observed across the years.
- In 2023, the number of days of payables decreased to 44.97 days, indicating that on average, the company took approximately 44.97 days to pay its suppliers.
- A lower number of days of payables can suggest that the company is paying its suppliers more quickly, potentially impacting its working capital management.
Overall, analyzing Mohawk Industries, Inc.'s activity ratios suggests fluctuations in inventory management, accounts receivable collection, and accounts payable practices over the past five years. The company may need to focus on optimizing working capital efficiency and improving cash flow dynamics for sustainable growth and profitability.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.21 | 2.50 | 2.40 | 2.07 | 2.11 |
| Total asset turnover | 0.81 | 0.83 | 0.78 | 0.66 | 0.74 |
The fixed asset turnover ratio measures how efficiently a company generates revenue from its fixed assets. In the case of Mohawk Industries, Inc., the trend indicates a slight decrease in the fixed asset turnover ratio from 2.12 in 2019 to 2.23 in 2023. This suggests that the company is generating more revenue per dollar of fixed assets over the years, indicating an improvement in asset utilization.
On the other hand, the total asset turnover ratio reflects how effectively a company uses its total assets to generate revenue. Mohawk Industries, Inc. shows an overall increasing trend in total asset turnover, from 0.74 in 2019 to 0.82 in 2023. This indicates that the company has become more efficient in generating sales in relation to its total asset base.
Overall, both fixed asset turnover and total asset turnover ratios of Mohawk Industries, Inc. have shown positive trends, highlighting improved efficiency in utilizing both fixed and total assets to drive revenue growth over the years.