Quanex Building Products (NX)
Working capital turnover
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 1,277,860 | 1,130,580 | 1,221,500 | 1,072,150 | 851,573 |
| Total current assets | US$ in thousands | 611,268 | 273,600 | 280,665 | 249,047 | 207,306 |
| Total current liabilities | US$ in thousands | 272,867 | 134,663 | 139,843 | 158,001 | 130,240 |
| Working capital turnover | 3.78 | 8.14 | 8.67 | 11.78 | 11.05 |
October 31, 2024 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $1,277,860K ÷ ($611,268K – $272,867K)
= 3.78
Working capital turnover measures the efficiency of Quanex Building Products in utilizing its working capital to generate revenue. A higher working capital turnover ratio indicates that the company is effectively using its current assets to support its operations and generate sales.
Looking at the trend over the past five years, we can see a decreasing pattern in the working capital turnover ratio. The ratio decreased from 11.05 in 2020 to 3.78 in 2024. This decline suggests a potential inefficiency in utilizing the company's current assets to generate revenue. A lower working capital turnover ratio may indicate that Quanex Building Products is holding excessive levels of current assets relative to its sales, which could lead to lower profitability or inefficient use of resources.
It is essential for the company to analyze the reasons behind this decreasing trend in the working capital turnover ratio and take necessary steps to improve efficiency in managing its working capital. Streamlining inventory management, optimizing accounts receivable, and managing accounts payable effectively could help improve the working capital turnover ratio and overall operational efficiency.
Peer comparison
Oct 31, 2024