Polaris Industries Inc (PII)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company manages its assets and liabilities.

1. Inventory turnover:
- Polaris Inc's inventory turnover has been relatively stable over the past five years, ranging from 3.50 to 4.58.
- A higher inventory turnover indicates that the company is selling its products quickly, which can be seen as positive.
- However, the slight decrease in 2023 compared to 2022 may suggest a slower rate of inventory turnover.

2. Receivables turnover:
- The receivables turnover for Polaris Inc has shown fluctuation over the years, ranging from 23.64 to 33.53.
- A higher receivables turnover implies that the company is collecting its receivables more efficiently.
- The significant increase in 2021 compared to 2020 and 2022 suggests an improvement in collecting sales revenue from customers.

3. Payables turnover:
- Polaris Inc's payables turnover ratio has generally been increasing, indicating that the company is taking longer to pay its suppliers.
- A higher payables turnover could imply a stronger bargaining position with suppliers or efficient management of payables.

4. Working capital turnover:
- The working capital turnover ratio for Polaris Inc has shown a decreasing trend over the years.
- A lower working capital turnover may indicate that the company is using its working capital less efficiently to generate sales.
- The significant drop in 2020 indicates a change in how effectively the company is utilizing its working capital.

Overall, analyzing these activity ratios provides a comprehensive view of Polaris Inc's operational efficiency in managing inventory, receivables, payables, and working capital over the years. It is essential for stakeholders to monitor these ratios to assess the company's performance and efficiency in asset and liability management.

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Average number of days

The activity ratios of Polaris Inc provide insight into its efficiency in managing inventory, collecting receivables, and paying its payables.

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows fluctuations over the years, with a peak in 2022 and 2023. This indicates that Polaris is taking longer to sell its inventory in recent years, which may tie up funds and increase holding costs. The increase in DOH might be a result of overstocking or slower sales.

2. Days of Sales Outstanding (DSO):
- DSO measures how long it takes for Polaris to collect on its credit sales. The trend shows varied figures, with a peak in 2022. A higher DSO suggests that the company is taking longer to collect its receivables, which can impact cash flow and liquidity. A decreasing trend in DSO is generally positive as it reflects a more efficient collection process.

3. Number of Days of Payables:
- The trend in the number of days of payables shows fluctuations, with an upward trend from 2019 to 2022 before a slight decrease in 2023. A higher number of days of payables indicates that Polaris is taking longer to pay its suppliers, which can be advantageous for cash flow management. However, it could strain relationships with suppliers if extended beyond reasonable limits.

Overall, Polaris Inc may need to focus on optimizing its inventory management, enhancing receivables collection efficiency, and carefully managing its payables to improve its working capital management and overall financial performance.

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Long-term

The fixed asset turnover ratio measures how efficiently a company generates revenue from its fixed assets. Polaris Inc's fixed asset turnover has shown a decreasing trend from 2019 to 2023, with a noticeable dip in 2023. This suggests that the company is generating less revenue per dollar of fixed assets invested over the years, indicating a potential decrease in efficiency in utilizing its fixed assets.

On the other hand, the total asset turnover ratio reflects how effectively a company utilizes all its assets to generate revenue. Polaris Inc's total asset turnover has fluctuated slightly over the same period, but remains relatively stable. This indicates that the company has been able to maintain a consistent level of revenue generation relative to its total assets.

Overall, the trend in Polaris Inc's long-term activity ratios suggests that while the company has maintained its ability to generate revenue in relation to its total assets, there may be room for improvement in efficiently utilizing its fixed assets to drive revenue in the future.