Quanex Building Products (NX)
Working capital turnover
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 1,130,580 | 1,221,500 | 1,072,150 | 851,573 | 893,841 |
| Total current assets | US$ in thousands | 273,600 | 280,665 | 249,047 | 207,306 | 190,326 |
| Total current liabilities | US$ in thousands | 134,663 | 139,843 | 158,001 | 130,240 | 109,754 |
| Working capital turnover | 8.14 | 8.67 | 11.78 | 11.05 | 11.09 |
October 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $1,130,580K ÷ ($273,600K – $134,663K)
= 8.14
The working capital turnover ratio indicates how efficiently a company is using its working capital to generate sales. A higher ratio suggests better efficiency in utilizing the working capital to support sales.
Based on the provided data, Quanex Building Products Corp's working capital turnover has been fluctuating over the past five years. The ratio was 8.14 in 2023, a decrease from 8.67 in 2022. This decline could suggest a less efficient use of working capital to support sales during the most recent period.
When compared to 2021, where the working capital turnover was 11.78, the ratios for 2022 and 2023 reflect a significant drop in efficiency. This may indicate that in 2022 and 2023, the company's working capital was less effectively used to generate revenue compared to the previous years.
Further comparison with 2020 and 2019 also shows a declining trend in the working capital turnover ratio. The ratios of 11.05 and 11.09, respectively, were higher than 2022 and 2023, implying better utilization of working capital in those earlier years.
The decreasing trend in working capital turnover ratios over the past two years may raise concerns about the company's ability to efficiently support sales with its working capital. It indicates a decreasing ability to generate revenue with the available working capital.
It would be important to investigate the reasons behind this declining trend and assess whether there are inefficiencies in managing working capital or if there have been changes in the company's operations that have affected this ratio. Additionally, it is vital to monitor this ratio closely in the coming periods to assess any improvements or further declines in working capital efficiency.
Peer comparison
Oct 31, 2023