National Presto Industries Inc (NPK)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 1.44 | 1.75 | 2.03 | 1.98 | 1.84 |
| Receivables turnover | 6.77 | 4.39 | 6.39 | 6.24 | 6.96 |
| Payables turnover | 7.15 | 9.21 | 8.89 | 8.00 | 10.93 |
| Working capital turnover | 1.18 | 1.18 | 1.21 | 1.17 | 1.03 |
A trend analysis of National Presto Industries Inc's activity ratios reveals important insights into the company's operational efficiency over the past five years. The inventory turnover ratio has shown a declining trend over this period, indicating that the company is taking longer to sell its inventory. This could be a sign of potential issues in managing inventory levels or demand forecasting.
Conversely, the receivables turnover ratio has generally improved, indicating that the company is collecting its accounts receivable more efficiently. This suggests effective credit management practices and the ability to convert sales into cash quickly.
The payables turnover ratio has fluctuated over the years but has stayed within a relatively stable range. A higher payables turnover ratio means that the company is paying its suppliers more frequently, which could indicate a strong negotiating position or efficient cash flow management.
The working capital turnover ratio, which measures how efficiently the company is using its working capital to generate sales, has generally increased over the years. This indicates that National Presto Industries Inc has been able to generate more sales with the same level of investment in working capital, showing improved efficiency in utilizing its resources.
Overall, while there are some areas of concern such as the declining inventory turnover ratio, the company has shown improvement in its receivables turnover and working capital turnover ratios. National Presto Industries Inc may benefit from focusing on optimizing its inventory management practices to improve overall operational efficiency.
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 | 254.16 | 208.37 | 180.21 | 184.73 | 198.30 |
| Days of sales outstanding (DSO) | days | 53.91 | 83.13 | 57.15 | 58.52 | 52.43 |
| Number of days of payables | days | 51.03 | 39.64 | 41.04 | 45.64 | 33.40 |
In analyzing National Presto Industries Inc's activity ratios over the past five years, we primarily focus on three key ratios: days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables.
1. Days of Inventory on Hand (DOH): This ratio indicates the number of days it takes for the company to convert its inventory into sales. From 2019 to 2023, the DOH has shown an increasing trend, with the figure rising from 198.30 days in 2019 to 254.16 days in 2023. A higher DOH suggests that National Presto Industries is taking more time to sell its inventory, which could indicate inefficiencies in inventory management or slowing sales.
2. Days of Sales Outstanding (DSO): DSO represents the average number of days it takes for the company to collect revenue after making a sale. The DSO trend for National Presto Industries has been somewhat fluctuating over the years, with a notable decrease from 83.13 days in 2022 to 53.91 days in 2023. A decreasing DSO is typically viewed positively as it indicates faster collection of accounts receivable and improved cash flows.
3. Number of Days of Payables: This ratio reflects the average number of days it takes for National Presto Industries to pay its suppliers or vendors. The trend shows fluctuations as well, with the number of days of payables increasing from 33.40 days in 2019 to 51.03 days in 2023. An increasing trend in this ratio suggests that the company is taking longer to settle its payables, which could indicate liquidity constraints or changes in supplier payment terms.
In summary, National Presto Industries Inc's activity ratios indicate a mixed performance over the past five years. While the company has shown improvements in DSO, the increasing trend in DOH and payables days may warrant further investigation into its inventory management and working capital practices.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 8.69 | 7.70 | 9.69 | 9.50 | 8.28 |
| Total asset turnover | 0.77 | 0.78 | 0.85 | 0.81 | 0.75 |
The fixed asset turnover ratio for National Presto Industries Inc has shown fluctuations over the past five years, ranging from 7.70 to 9.69. This ratio indicates the company's efficiency in generating revenue from its investment in fixed assets. In general, a higher fixed asset turnover ratio is favorable as it suggests that the company is effectively utilizing its fixed assets to generate sales.
On the other hand, the total asset turnover ratio has also demonstrated some variability, with values ranging from 0.75 to 0.85. This ratio reflects the company's ability to generate sales from its total assets, including both fixed and current assets. A higher total asset turnover ratio is typically preferred as it indicates that the company is efficiently utilizing its total assets to generate revenue.
Overall, the analysis of National Presto Industries Inc's long-term activity ratios shows that the company has been relatively effective in utilizing both fixed and total assets to generate sales. However, it is essential for the company to closely monitor these ratios to ensure ongoing efficiency in asset utilization and revenue generation.