Nordson Corporation (NDSN)

Short-term

Turnover ratios

Inventory turnover measures how efficiently a company manages its inventory levels. Nordson Corporation's inventory turnover has been declining over the past five years, from 6.63 in 2020 to 4.40 in 2024. This suggests that the company is holding onto its inventory for a longer period, which could indicate inefficiencies in inventory management or potential overstocking.

Receivables turnover reflects how well a company collects outstanding payments from its customers. Nordson's receivables turnover has been relatively stable over the years, fluctuating between 4.35 and 4.78. This suggests that Nordson has been effective in collecting payments from its customers in a timely manner.

Payables turnover ratio shows how quickly a company pays off its suppliers. Nordson's payables turnover has been relatively consistent, with a slight decrease in 2021 followed by stability in the range of 19 to 25.87. A higher payables turnover indicates that the company is efficiently managing its payable obligations.

Working capital turnover measures how effectively a company utilizes its working capital to generate sales. Nordson's working capital turnover has been fluctuating over the past five years, with a significant peak in 2022 at 8.60. This indicates that Nordson was able to generate significant sales relative to its working capital in 2022. However, the ratio declined in subsequent years, indicating a decrease in efficiency in utilizing working capital to generate sales.

Overall, while Nordson has been effective in managing its receivables and payables turnover, there are signs of inefficiencies in inventory management and a declining trend in working capital turnover. Management may need to focus on improving inventory turnover and working capital efficiency to enhance the company's overall operational performance.

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Average number of days

Nordson Corporation's activity ratios indicate the efficiency of its operations in managing inventory, collecting receivables, and paying its suppliers.

1. Days of Inventory on Hand (DOH):
- Nordson's DOH has been gradually increasing over the past five years, reaching 82.93 days in 2024. This suggests that the company is holding inventory for a longer period before selling it. A high DOH could indicate overstocking or slow-moving inventory, which may tie up capital and result in higher holding costs.

2. Days of Sales Outstanding (DSO):
- Nordson's DSO has fluctuated over the years but remains relatively stable between 76.36 to 83.98 days. This metric signifies the average number of days it takes for the company to collect payments from its customers. A higher DSO may indicate inefficiencies in credit and collection policies, potentially leading to cash flow issues.

3. Number of Days of Payables:
- Nordson's days of payables have been increasing steadily, standing at 17.01 days in 2024. A longer payment period suggests that the company is taking more time to settle its payables with suppliers. While lengthening the payment period can enhance cash flow management, it might strain supplier relationships if not managed effectively.

In summary, Nordson Corporation's activity ratios highlight areas where the company may need to focus on improving operational efficiency, such as inventory management, accounts receivable collection, and supplier payment terms, to optimize working capital and enhance overall financial performance.

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Long-term

The long-term activity ratios of Nordson Corporation provide insights into its efficiency in managing fixed assets and generating sales relative to its total assets over the past five years. The fixed asset turnover ratio has trended downwards from 5.82 in 2020 to 4.94 in 2024, indicating a decrease in the company's ability to generate sales from its fixed assets. This suggests that Nordson may be experiencing challenges in maximizing the productivity of its long-term investments in property, plant, and equipment.

On the other hand, the total asset turnover ratio has shown fluctuations over the period, with a peak of 0.67 in 2022 and a low of 0.45 in 2024. This ratio indicates how efficiently the company is utilizing all its assets to generate revenue. While there was an improvement in the total asset turnover ratio between 2020 and 2022, the decline in subsequent years raises concerns about Nordson's overall asset management efficiency.

In conclusion, Nordson Corporation's long-term activity ratios reveal a mixed performance in terms of utilizing fixed assets and total assets to drive sales. The decreasing trend in fixed asset turnover and fluctuations in total asset turnover highlight the importance of closely monitoring the company's asset management strategies to ensure sustainable long-term growth and profitability.