Callaway Golf Company (MODG)

Activity ratios

Short-term

Turnover ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Inventory turnover 2.87 1.65 1.69 1.59 1.41 1.52 1.32 1.16 1.10 1.42 1.67 1.76 1.64 2.85 3.80 4.49 4.93 5.16 4.34 3.81
Receivables turnover 22.45 13.47 10.05 9.40 19.80 13.16 9.98 8.55 21.03 13.42 9.46 8.08 24.66 10.74 7.31 5.39 11.23 6.07 6.22 5.65
Payables turnover 22.53 8.93 9.40 8.38 8.54 10.83 8.54 4.72 6.60 6.61 5.81 5.79 6.33 8.68 11.47 10.90 26.22 — — —
Working capital turnover 5.42 5.31 5.28 5.66 6.03 5.88 5.56 5.86 11.32 11.66 11.93 13.99 10.27 5.49 5.10 3.50 3.00 2.71 2.89 5.56

Based on the provided data, we can analyze the activity ratios of Callaway Golf Company over several reporting periods.

1. Inventory Turnover:
The inventory turnover ratio measures how efficiently a company manages its inventory. Callaway Golf's inventory turnover decreased from 3.81 in March 2020 to 1.10 in December 2022, indicating a declining trend. This suggests that Callaway may be holding onto inventory for longer periods, which could tie up capital and impact profitability. The ratio increased slightly to 2.87 by December 2024, but it remains relatively low compared to earlier periods.

2. Receivables Turnover:
The receivables turnover ratio reflects how efficiently a company collects its receivables. Callaway Golf's receivables turnover fluctuated over the periods, reaching a peak of 24.66 in December 2021. This suggests that the collection of receivables was managed effectively during that period. However, the ratio declined to 22.45 by December 2024, indicating a potential slowdown in receivables collection efficiency.

3. Payables Turnover:
The payables turnover ratio assesses how quickly a company pays its suppliers. Callaway Golf's payables turnover was not available for the earlier periods but ranged from 4.72 to 22.53 in the latter periods. The increase in the ratio indicates that Callaway is taking longer to pay its suppliers, which can be advantageous for cash flow management. However, excessively delaying payments may strain supplier relationships.

4. Working Capital Turnover:
The working capital turnover ratio evaluates how efficiently a company utilizes its working capital to generate sales. Callaway Golf's working capital turnover ranged from 2.71 to 13.99 during the periods. The higher ratios suggest that the company effectively utilized its working capital to generate sales. However, the ratio decreased to 5.42 by December 2024, indicating a potential decrease in efficiency in utilizing working capital.

In conclusion, the analysis of Callaway Golf Company's activity ratios indicates fluctuations and trends in inventory management, receivables collection, payables management, and working capital efficiency over the reporting periods. Monitoring these ratios can provide insights into the company's operational performance and financial health.

Average number of days

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Days of inventory on hand (DOH) days 127.25 221.22 215.84 229.93 259.75 240.86 277.12 314.97 333.25 256.50 218.82 207.96 221.95 127.87 95.95 81.25 74.04 70.77 84.06 95.93
Days of sales outstanding (DSO) days 16.26 27.09 36.33 38.84 18.44 27.74 36.58 42.68 17.36 27.20 38.59 45.17 14.80 33.97 49.93 67.75 32.49 60.09 58.70 64.61
Number of days of payables days 16.20 40.87 38.82 43.57 42.74 33.72 42.73 77.30 55.27 55.19 62.78 63.06 57.70 42.03 31.83 33.50 13.92 — — —

Callaway Golf Company's Days of Inventory on Hand (DOH) ratio shows an increasing trend over the years, indicating that the company is taking longer to sell its inventory. This could suggest potential inefficiencies in inventory management or possibly slower sales. The ratio reached its peak at 333.25 days on December 31, 2022, and has since declined but remains relatively high, standing at 127.25 days on December 31, 2024.

In contrast, the Days of Sales Outstanding (DSO) ratio reflects the number of days it takes for the company to collect its accounts receivable. The trend in this ratio has been more fluctuating, with some improvements seen in shorter collection periods. The DSO ratio hit its lowest point of 14.80 days on December 31, 2021, indicating an efficient collection process, and slightly increased to 16.26 days on December 31, 2024.

Regarding the Number of Days of Payables ratio, Callaway Golf Company shows a varied payment period to its suppliers over the years. The company has managed to extend its payment period since 2020, potentially benefiting from increased flexibility in managing its cash flow. However, the payment period has shown some fluctuations, indicating changes in the company's approach to managing payables.

Overall, the activity ratios suggest that Callaway Golf Company may need to focus on improving inventory turnover to reduce holding costs and enhance cash flow efficiency. Additionally, optimizing accounts receivable collection processes and maintaining a balanced approach to managing payables could further strengthen the company's financial health and operational performance.

Long-term

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Fixed asset turnover 1.89 1.87 1.88 1.88 1.90 1.96 2.01 2.08 2.14 2.24 2.28 2.25 2.12 2.06 1.88 1.49 10.67 10.29 9.58 10.50
Total asset turnover 0.55 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.46 0.45 0.43 0.40 0.37 0.33 0.25 0.79 0.76 0.77 0.74

The Fixed Asset Turnover ratio measures how efficiently a company is using its fixed assets to generate sales. Callaway Golf Company's Fixed Asset Turnover ratio has shown a declining trend from March 2020 to December 2020, with a sudden drop in March 2021 and June 2021. However, there has been a steady improvement since then, reaching a value of 1.89 in December 2024.

On the other hand, the Total Asset Turnover ratio indicates how efficiently a company is using all its assets to generate revenue. Callaway Golf Company's Total Asset Turnover ratio has also shown fluctuations over the years, with an increase in values from March 2021 to December 2024, indicating an improvement in the company's asset utilization efficiency.

Overall, the improvement in both the Fixed Asset Turnover and Total Asset Turnover ratios from 2021 to 2024 suggests that Callaway Golf Company has become more efficient in utilizing its assets to generate sales, which is a positive sign for its long-term sustainable growth.