Quanex Building Products (NX)

Short-term

Turnover ratios

Quanex Building Products Corp's activity ratios provide insights into the company's efficiency in managing its inventory, receivables, payables, and working capital.

First, let's analyze the inventory turnover. This ratio measures how many times a company's inventory is sold and replaced over a period. Quanex's inventory turnover has shown a fluctuating trend over the past five years, with a slight increase in 2023 compared to the previous year. The high inventory turnover indicates that the company is managing its inventory efficiently and is able to sell its products relatively quickly.

Next, the receivables turnover ratio indicates how effectively the company is collecting cash from its customers. Quanex has experienced fluctuations in this ratio, with a significant decrease in 2022 followed by an increase in 2023. The 2023 figure indicates that the company is collecting cash from its credit sales at a slightly slower pace compared to the previous year.

The payables turnover ratio measures how efficiently a company pays its suppliers. Quanex has maintained relatively consistent payables turnover over the years, indicating that the company effectively manages its payments to suppliers. The increase in 2023 compared to 2022 suggests that the company is now paying its suppliers at a slightly faster rate.

Lastly, the working capital turnover ratio represents the efficiency of the company in generating sales revenue relative to its working capital. Quanex has experienced a declining trend in this ratio over the past three years, signifying a reduction in the company's ability to generate sales revenue relative to its working capital. This decline may warrant further investigation into the company's capital management.

In conclusion, while Quanex Building Products Corp has shown strong efficiency in managing its inventory and payables, there are fluctuations and declining trends in its receivables turnover and working capital turnover ratios, which may require closer attention and management in the future.

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Average number of days

To analyze Quanex Building Products Corp's activity ratios, we will focus on three key metrics: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

Days of Inventory on Hand (DOH) measures the average number of days it takes for the company to sell its inventory. A lower DOH is generally preferred as it indicates efficient inventory management. Quanex Building Products Corp's DOH has fluctuated over the past five years, ranging from 33.90 days in 2020 to 46.30 days in 2022. However, the current DOH of 41.91 days is higher than in 2020, suggesting a slight decrease in inventory turnover efficiency.

Days of Sales Outstanding (DSO) reflects the average number of days it takes for the company to collect revenue after a sale. A lower DSO is favorable as it indicates quicker collection of receivables. Quanex Building Products Corp has seen fluctuations in DSO over the years, with the current DSO of 34.10 days being higher than in 2022 but lower than in 2019 and 2021. This implies a moderate efficiency in collecting receivables.

Number of Days of Payables measures the average number of days it takes for the company to pay its suppliers. An increasing trend in this ratio may indicate that the company is taking longer to pay its suppliers, which could be advantageous for cash flow management. Quanex Building Products Corp's payables period has varied over the years, with the current figure of 31.82 days being higher than in 2019 but lower than in 2021 and 2020, suggesting a minor improvement in payables management.

In summary, Quanex Building Products Corp's activity ratios indicate mixed performance in inventory management, receivables collection, and payables management. While the company has experienced fluctuations in these metrics, there is room for improvement in optimizing inventory turnover, enhancing receivables collection, and effectively managing payables to drive operational efficiency and working capital management.

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Long-term

Quanex Building Products Corp's long-term activity ratios provide insight into the efficiency of the company's use of its assets to generate sales.

Fixed Asset Turnover:
The fixed asset turnover ratio measures how efficiently a company uses its fixed assets to generate sales. Quanex's fixed asset turnover has fluctuated over the past five years, with a significant decrease from 6.77 in 2022 to 4.51 in 2023. This reduction indicates that the company generated $4.51 in sales for every $1 of fixed assets in 2023, compared to $6.77 in 2022. This could suggest some decline in the utilization or productivity of the company's fixed assets in generating revenue.

Total Asset Turnover:
The total asset turnover ratio indicates how efficiently a company uses its assets to generate sales. Quanex's total asset turnover has also experienced fluctuations over the past five years, with a decrease from 1.69 in 2022 to 1.36 in 2023. This decline means that the company generated $1.36 in sales for every $1 of total assets in 2023, compared to $1.69 in 2022.

Comparative Analysis:
From a comparative standpoint, both the fixed asset turnover and total asset turnover ratios have experienced declines in 2023. This suggests that Quanex Building Products Corp may not be utilizing its assets as effectively or efficiently to generate sales compared to previous years.

In summary, Quanex's long-term activity ratios indicate some decrease in the efficiency of using fixed and total assets to generate sales. Further investigation into the management and utilization of the company's assets may be warranted to address these declines and to improve overall operational efficiency.