Nordson Corporation (NDSN)
Activity ratios
Short-term
Turnover ratios
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.45 | 5.07 | 5.52 | 6.63 | 6.23 |
| Receivables turnover | 4.35 | 4.78 | 4.77 | 4.43 | 4.04 |
| Payables turnover | 19.02 | 19.59 | 19.68 | 25.87 | 20.74 |
| Working capital turnover | 3.97 | 8.60 | 3.25 | 3.18 | 4.02 |
Based on the activity ratios of Nordson Corp., we can observe the following trends:
1. Inventory Turnover:
The inventory turnover has declined from 3.54 in 2019 to 2.65 in 2023, indicating that Nordson Corp. is taking longer to sell its inventory. This may suggest a potential issue with inventory management or declining demand for its products.
2. Receivables Turnover:
The receivables turnover has fluctuated over the years, with a peak of 4.83 in 2021 and a low of 4.13 in 2019. Currently, it stands at 4.45 in 2023, signifying that the company is collecting its receivables approximately 4.45 times during the year. This stability may indicate consistent credit and collection practices.
3. Payables Turnover:
The payables turnover has also varied, but generally remained relatively stable over the years. The ratio decreased from 13.96 in 2020 to 11.32 in 2023, indicating that Nordson Corp. is taking longer to pay its suppliers. This may imply either improved bargaining power with suppliers or a shift in payment terms.
4. Working Capital Turnover:
The working capital turnover has fluctuated significantly, with a notable decrease from 8.67 in 2022 to 4.06 in 2023. This suggests that Nordson Corp. is generating less revenue per dollar of working capital, indicating potential inefficiencies in the utilization of its working capital.
In conclusion, the activity ratios of Nordson Corp. reflect varying trends in inventory management, receivables collection, and payment to suppliers, highlighting the need for closer scrutiny of its operational efficiency and working capital utilization.
Average number of days
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 82.10 | 71.94 | 66.18 | 55.09 | 58.58 |
| Days of sales outstanding (DSO) | days | 83.98 | 76.36 | 76.46 | 82.47 | 90.27 |
| Number of days of payables | days | 19.19 | 18.63 | 18.55 | 14.11 | 17.60 |
Days of inventory on hand (DOH) measures how long, on average, it takes for a company to sell its inventory. Nordson Corp.'s inventory holding period has been increasing over the last five years, from 103.22 days in 2019 to 137.96 days in 2023. This suggests a slower turnover of inventory, which may tie up more capital and could indicate potential issues with inventory management or demand forecasting.
Days of sales outstanding (DSO) measures the average number of days it takes for a company to collect payment after a sale is made. Nordson Corp.'s DSO has shown some fluctuation, ranging from 75.62 days in 2021 to 88.29 days in 2019. A higher DSO may indicate potential problems with collections or credit policy, which could affect the company's cash flow and liquidity.
The number of days of payables indicates how long, on average, it takes for a company to pay its suppliers. Nordson Corp.'s payables period has been relatively stable, varying from 26.14 days in 2020 to 32.25 days in 2023. A longer payables period generally allows the company to hold onto its cash longer, potentially improving cash flow and working capital management.
In summary, Nordson Corp.'s activity ratios reveal potential areas of concern, including increasing inventory holding period and fluctuating sales collection period. These metrics could indicate operational inefficiencies or challenges in managing working capital effectively. Further analysis and comparison with industry benchmarks would provide additional insights into the company's performance.
Long-term
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.54 | 7.27 | 6.57 | 5.82 | 5.38 |
| Total asset turnover | 0.49 | 0.67 | 0.62 | 0.57 | 0.61 |
The long-term activity ratios for Nordson Corp. show the efficiency with which the company is utilizing its fixed and total assets to generate sales over the past five years.
The fixed asset turnover ratio indicates that for every dollar invested in fixed assets, the company generated sales of $6.69 in 2023, compared to $7.33 in 2022, $6.64 in 2021, $5.91 in 2020, and $5.50 in 2019. This indicates a decreasing trend in the utilization of fixed assets to generate sales over the past five years, which might be due to changes in the company's capital expenditure and depreciation policies.
The total asset turnover ratio reveals that for each dollar of total assets, Nordson Corp. generated sales of $0.50 in 2023, compared to $0.68 in 2022, $0.62 in 2021, $0.58 in 2020, and $0.62 in 2019. This suggests a declining trend in the overall efficiency of asset utilization to generate sales. This trend may be due to changes in the company's sales strategy or the composition of its asset base.
In conclusion, the declining trend in both fixed asset turnover and total asset turnover ratios indicates a decrease in the efficiency of Nordson Corp.'s long-term asset utilization to generate sales. This warrants further investigation into the company's capital investment strategies, asset management, and sales performance to identify opportunities for improvement.