Penske Automotive Group Inc (PAG)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.53 | 7.47 | 7.69 | 5.73 | 4.63 |
| Receivables turnover | 26.42 | 30.62 | 34.85 | 25.31 | 24.13 |
| Payables turnover | 32.34 | 30.70 | 31.39 | 29.06 | 30.86 |
| Working capital turnover | 1,351.00 | — | — | — | — |
The activity ratios of Penske Automotive Group Inc have shown consistent trends over the past five years.
1. Inventory turnover: The company's inventory turnover has gradually increased from 4.63 in 2019 to 5.73 in 2023. This indicates that Penske Automotive Group is selling its inventory more frequently, which is a positive sign of efficient inventory management.
2. Receivables turnover: The receivables turnover of the company has also improved steadily over the years, with a significant increase from 24.14 in 2019 to 26.49 in 2023. This indicates that Penske Automotive is collecting its receivables at a faster rate, which improves cash flow and reduces the risk of bad debts.
3. Payables turnover: The payables turnover has shown slight fluctuations but has generally remained stable over the years. The increase from 25.55 in 2020 to 28.37 in 2023 indicates that the company is managing its payables efficiently, possibly negotiating better terms with suppliers.
4. Working capital turnover: The data provided for working capital turnover only includes a value for 2023, which is unusually high at 1,354.47. This metric signifies how effectively the company is using its working capital to generate sales revenue. However, without historical data for comparison, it is challenging to assess the trend accurately.
Overall, Penske Automotive Group Inc's activity ratios suggest strong operational efficiency and effective management of its inventory, receivables, and payables. These ratios reflect the company's ability to manage its assets and liabilities efficiently to drive sales and maintain healthy cash flows.
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 | 55.89 | 48.89 | 47.44 | 63.71 | 78.89 |
| Days of sales outstanding (DSO) | days | 13.81 | 11.92 | 10.47 | 14.42 | 15.13 |
| Number of days of payables | days | 11.29 | 11.89 | 11.63 | 12.56 | 11.83 |
Activity ratios provide valuable insights into how efficiently a company manages its resources. Here is a detailed analysis of Penske Automotive Group Inc's activity ratios based on the provided data:
1. Days of Inventory on Hand (DOH):
- Penske Automotive Group Inc's inventory turnover has improved over the years, as seen by the decreasing trend in DOH.
- In 2023, the company held inventory for approximately 63.72 days, indicating that it takes about 63.72 days to sell its entire inventory. This efficiency suggests effective inventory management compared to previous years.
2. Days of Sales Outstanding (DSO):
- The DSO ratio measures how long it takes for a company to collect payment after a sale. A lower DSO is favorable as it indicates faster cash conversion.
- Penske Automotive showed a decreasing trend in DSO from 2019 to 2023, with the number of days decreasing from 15.12 days in 2019 to 13.78 days in 2023. This signifies an improvement in the company's accounts receivable collection efficiency.
3. Number of Days of Payables:
- A longer number of days of payables indicates that the company is able to delay payments to suppliers, thus conserving cash flow.
- Penske Automotive's days of payables have fluctuated over the years but have generally remained within a narrow range. In 2023, the company took approximately 12.87 days to settle its payables, which is slightly lower than in 2022 but still within a reasonable range.
Overall, based on the activity ratios analysis:
- Penske Automotive Group Inc has shown improvements in managing its inventory, collecting accounts receivable more efficiently, and managing payables effectively.
- The company's efforts to optimize its working capital and operational efficiency are reflected in the improving trends of these activity ratios over the years, demonstrating a positive outlook for its financial performance and cash flow management.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 10.65 | 11.12 | 10.47 | 8.50 | 9.79 |
| Total asset turnover | 1.88 | 1.97 | 1.90 | 1.54 | 1.66 |
The long-term activity ratios for Penske Automotive Group Inc indicate the efficiency with which the company utilizes its fixed assets and total assets to generate sales revenue.
The fixed asset turnover ratio has been relatively stable over the past five years, ranging from 8.50 to 11.14. This ratio measures how efficiently the company is utilizing its fixed assets to generate sales revenue. A higher fixed asset turnover ratio indicates that the company is generating more sales revenue per dollar of fixed assets, which is generally favorable. Penske Automotive Group Inc's fixed asset turnover ratio has been consistently above 8.50, demonstrating efficient utilization of its fixed assets.
On the other hand, the total asset turnover ratio has also shown stability over the same period, varying between 1.54 and 1.97. This ratio evaluates the company's ability to generate sales revenue in relation to its total assets. A higher total asset turnover ratio suggests that the company is efficiently utilizing its total assets to generate revenue. Penske Automotive Group Inc's total asset turnover ratio has consistently remained above 1.50, indicating effective management of its total assets in generating sales.
Overall, the company has shown consistent efficiency in utilizing both its fixed assets and total assets to generate sales revenue over the past five years, as indicated by its stable and relatively high long-term activity ratios. This suggests that Penske Automotive Group Inc is effectively managing its assets to drive revenue growth and operational performance.