Ormat Technologies Inc (ORA)

Short-term

Turnover ratios

Ormat Technologies Inc's activity ratios provide insights into how efficiently the company is managing its assets and operations.

1. Inventory turnover: There has been a fluctuation in the inventory turnover ratio over the past five years, with a peak in 2022 at 20.38 times. This ratio indicates how many times the company's inventory is sold and replaced within a specific period. The lower ratio in 2023 suggests that inventory is taking longer to sell compared to previous years.

2. Receivables turnover: The receivables turnover ratio shows how quickly Ormat Technologies is collecting payments from customers. The trend indicates a generally consistent performance, with a slight decrease in 2023. This may imply a longer collection period for receivables compared to previous years.

3. Payables turnover: The payables turnover ratio reflects how quickly Ormat Technologies is paying its suppliers. The decreasing trend in the payables turnover ratio indicates that the company is taking longer to pay its suppliers over the years. This could be a strategy to optimize cash flow or negotiate more extended payment terms with suppliers.

4. Working capital turnover: The working capital turnover ratio measures how efficiently the company uses its working capital to generate revenue. Ormat Technologies' working capital turnover has shown significant fluctuations over the years, with a notable increase in 2021 after a sharp decline in 2020. The exceptionally high ratio in 2019 suggests that the company was effectively utilizing its working capital to generate revenue that year.

Overall, analyzing these activity ratios provides valuable insights into Ormat Technologies Inc's operational efficiency and management of its assets and liabilities over the past five years.

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Average number of days

The activity ratios of Ormat Technologies Inc over the past five years indicate various trends in its inventory management, accounts receivable collection, and accounts payable payment cycles.

1. Days of inventory on hand (DOH):
- Ormat has shown fluctuations in its inventory management efficiency over the years, with the number of days of inventory on hand varying between 17.91 days to 30.05 days.
- The increase in DOH from 2019 to 2020 and then a subsequent decrease by 2021 suggests changes in inventory control and management practices.
- In 2023, the DOH increased significantly to 29.07 days, indicating a potential buildup of inventory that may require closer monitoring to avoid excessive holding costs.

2. Days of sales outstanding (DSO):
- The DSO ratio reflects how long it takes for the company to collect payments from its customers after a sale. Ormat's DSO has ranged from 83.00 days to 119.52 days over the past five years.
- There has been an upward trend in DSO from 2019 to 2023, indicating a slower collection of accounts receivable over time.
- A high DSO may suggest potential liquidity concerns or issues with customer credit policies that may need to be addressed to improve cash flow efficiency.

3. Number of days of payables:
- The days of payables metric measures how long it takes for a company to pay its suppliers. Ormat has maintained its payables cycle within a range of 56.10 days to 90.83 days over the last five years.
- An increase in the number of days of payables from 56.10 days in 2019 to 90.83 days in 2023 indicates that Ormat is taking longer to settle its payables obligations.
- While extending payment terms can help preserve cash, it is essential to strike a balance to maintain good relationships with suppliers and avoid disruptions in the supply chain.

Overall, Ormat Technologies Inc should continually monitor and optimize its activity ratios to achieve efficient working capital management and improve overall financial performance.

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Long-term

Ormat Technologies Inc's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into the company's efficiency in managing its assets to generate revenue over multiple years.

The fixed asset turnover ratio has been relatively stable over the past five years, ranging from 0.22 to 0.32. This indicates that the company generated approximately $0.22 to $0.32 in revenue for every dollar invested in fixed assets during these periods. While the ratio has remained fairly consistent, the slight decrease from 0.32 in 2019 to 0.22 in 2023 suggests a decline in the efficiency of utilizing fixed assets to generate sales.

In terms of total asset turnover, Ormat Technologies Inc's performance has also shown consistency, with ratios fluctuating between 0.15 and 0.23 over the last five years. This ratio demonstrates the company's ability to generate revenue relative to its total assets. The decreasing trend from 0.23 in 2019 to 0.16 in 2023 implies that the company may be experiencing challenges in efficiently utilizing its total assets to drive sales growth.

Overall, while Ormat Technologies Inc has maintained a stable performance in terms of asset turnover ratios, the declining trend in both fixed asset turnover and total asset turnover ratios suggests a potential inefficiency in asset utilization, which may warrant further investigation to identify opportunities for improvement in operational efficiency and profitability.