PHINIA Inc. (PHIN)

Short-term

Turnover ratios

PHINIA Inc.'s activity ratios provide insights into how efficiently the company manages its assets and liabilities to generate revenue. The inventory turnover ratio indicates how many times the company sells and replaces its inventory during a specific period. From March 31, 2024, to December 31, 2024, the inventory turnover ratio improved steadily from 5.92 to 6.86. This suggests that the company is managing its inventory more efficiently, selling its products faster, and replenishing its inventory at a faster pace.

The receivables turnover ratio measures how efficiently a company collects cash from its customers. PHINIA Inc.'s receivables turnover ratio increased from 3.46 on March 31, 2024, to 4.22 on December 31, 2024. This improvement indicates that the company is collecting payments from its customers more quickly. A higher receivables turnover ratio implies better cash flow management and reduced credit risk.

The payables turnover ratio reflects how quickly a company pays its suppliers. PHINIA Inc.'s payables turnover ratio also increased from 4.73 on March 31, 2024, to 5.83 on December 31, 2024. This uptrend suggests that the company is managing its payables more efficiently, potentially negotiating better payment terms with suppliers or improving its working capital management.

The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate revenue. PHINIA Inc.'s working capital turnover ratio decreased slightly from 4.46 on March 31, 2024, to 3.95 on December 31, 2024. Although the ratio declined, it still indicates that the company is effectively using its working capital to generate sales.

Overall, the activity ratios for PHINIA Inc. show improvements in inventory turnover, receivables turnover, and payables turnover, indicating enhanced operational efficiency and better management of assets and liabilities to drive revenue growth and profitability.

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Average number of days

Based on the provided data for PHINIA Inc., we can analyze the company's activity ratios as follows:

1. Days of Inventory on Hand (DOH):
- As of March 31, 2024, PHINIA Inc. had 61.61 days of inventory on hand, indicating the average number of days inventory is held before being sold.
- By September 30, 2024, the company reduced its DOH to 59.69 days and further down to 53.22 days by December 31, 2024. This trend demonstrates an improvement in inventory management efficiency, as lower DOH values suggest faster turnover of inventory.

2. Days of Sales Outstanding (DSO):
- On March 31, 2024, PHINIA Inc. had a DSO of 105.42 days, reflecting the average number of days it takes to collect revenue after a sale is made.
- The company managed to decrease its DSO to 96.11 days by September 30, 2024, and further to 86.56 days by December 31, 2024. This decline in DSO indicates an improvement in collecting receivables more efficiently over time.

3. Number of Days of Payables:
- As of March 31, 2024, PHINIA Inc. had 77.11 days of payables outstanding, representing the average number of days it takes to pay its suppliers.
- By September 30, 2024, the company reduced its payables days to 72.21 days and further down to 62.57 days by December 31, 2024. This reduction in payables days suggests that PHINIA Inc. is paying its suppliers more promptly, which could impact its cash flow management.

Overall, the decreasing trends in Days of Inventory on Hand, Days of Sales Outstanding, and Number of Days of Payables suggest that PHINIA Inc. is effectively managing its working capital and operating cycle, leading to enhanced operational efficiency and potentially improved financial performance.

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Long-term

Long-term activity ratios provide insights into how efficiently a company utilizes its long-term assets to generate sales.

Fixed asset turnover ratio measures how efficiently a company generates sales from its investments in fixed assets. PHINIA Inc.'s fixed asset turnover ratio has been consistently around 4 times throughout the year 2024, indicating that the company is effectively utilizing its fixed assets to generate revenue.

Total asset turnover ratio, on the other hand, assesses the company's ability to generate sales from its total assets. PHINIA Inc.'s total asset turnover ratio has been relatively stable, ranging from 0.87 to 0.91 in 2024. This suggests that the company is efficiently using its total assets to generate sales.

In conclusion, based on the data provided, PHINIA Inc. appears to be effectively utilizing both its fixed and total assets to generate revenue, as evidenced by its stable and satisfactory long-term activity ratios.