Novanta Inc (NOVT)

Short-term

Turnover ratios

Novanta Inc's activity ratios provide insights into how effectively the company is managing its inventory, receivables, payables, and working capital.

1. Inventory Turnover:
Novanta's inventory turnover has fluctuated over the years, with a peak in 2020 and a slight decrease in 2023. This ratio indicates how many times Novanta sells and replaces its inventory within a given period. A higher turnover ratio generally indicates efficient inventory management and effective sales strategies.

2. Receivables Turnover:
Novanta's receivables turnover has shown some variability but has remained relatively stable over the years. This ratio reflects how quickly Novanta collects cash from its credit sales. A higher turnover ratio suggests an efficient credit and collection process, ensuring timely cash inflows.

3. Payables Turnover:
Novanta's payables turnover has fluctuated, with a notable increase in 2023. This ratio indicates how quickly Novanta pays off its suppliers. A higher turnover ratio may suggest a more favorable relationship with suppliers or efficient cash management.

4. Working Capital Turnover:
Novanta's working capital turnover has shown fluctuations over the years. This ratio measures how efficiently Novanta utilizes its working capital to generate sales revenue. A higher turnover ratio indicates effective utilization of working capital to drive revenue growth.

Overall, analyzing Novanta Inc's activity ratios provides valuable insights into its operational efficiency and liquidity management. The company's performance in managing inventory, receivables, payables, and working capital can have significant implications for its overall financial health and sustainability.

---

Average number of days

Novanta Inc's activity ratios show trends in how efficiently the company manages its inventory, collects receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH) measures how many days it takes for Novanta to sell its inventory. The decreasing trend from 127.10 days in 2022 to 113.17 days in 2023 indicates improved inventory management efficiency. However, the current DOH is higher than in 2020 and 2019, suggesting a potential increase in inventory holdings.

2. Days of Sales Outstanding (DSO) shows the average number of days Novanta takes to collect payment from its customers. The DSO increased from 59.02 days in 2022 to 61.07 days in 2023, indicating a slight delay in receivables collection. Nevertheless, the DSO remains relatively stable over the years.

3. Number of Days of Payables measures how long it takes for Novanta to pay its suppliers. A decrease in the number of days of payables from 56.91 days in 2022 to 43.33 days in 2023 suggests that the company is paying its suppliers more quickly.

Overall, while Novanta has improved its inventory management efficiency and payment to suppliers, there is a slight delay in collecting receivables. Maintaining a balance between these three factors is crucial for the company's overall liquidity management and working capital efficiency.

---

Long-term

The long-term activity ratios for Novanta Inc indicate the efficiency with which the company utilizes its fixed assets and total assets to generate revenue over the past five years.

The fixed asset turnover ratio has decreased slightly from 8.34 in 2022 to 8.06 in 2023, which suggests a decrease in the efficiency of utilizing fixed assets to generate sales. However, the ratio remains relatively high, indicating that Novanta is able to generate significant revenue relative to its investment in fixed assets.

On the other hand, the total asset turnover ratio has fluctuated over the years, ranging from 0.58 in 2021 to 0.72 in 2019 and 2023. This ratio indicates how efficiently the company is utilizing all its assets to generate revenue. The increase in total asset turnover from 0.69 in 2022 to 0.72 in 2023 indicates an improvement in the company's ability to generate sales relative to its total assets.

Overall, while there have been some fluctuations in these long-term activity ratios, Novanta Inc has generally maintained strong efficiency in utilizing both its fixed assets and total assets to generate revenue over the past five years.