Polaris Industries Inc (PII)

Short-term

Turnover ratios

Polaris Inc's activity ratios provide insights into how efficiently the company manages its assets and liabilities. Looking at the inventory turnover ratio, we see a consistent range between 3.34 and 3.85 over the past eight quarters, indicating that Polaris is able to sell and replace its inventory approximately 3 to 4 times a year. This suggests effective inventory management and a good balance between carrying costs and sales.

The receivables turnover ratio shows a fluctuating trend, with values ranging from 17.10 to 32.39. This ratio indicates how well the company collects outstanding payments from customers. The higher turnover ratios seen in some quarters suggest that Polaris is efficient in converting credit sales into cash, while lower ratios signal potential issues with collections.

The payables turnover ratio demonstrates how quickly Polaris pays its suppliers. The company has maintained a relatively stable payables turnover ratio between 6.48 and 9.78, indicating that Polaris is managing its payables effectively and potentially negotiating favorable payment terms with suppliers.

Lastly, the working capital turnover ratio illustrates how efficiently Polaris generates revenue relative to its working capital. The ratios ranging from 11.79 to 20.30 show variations in how effectively the company is utilizing its working capital to drive sales. Higher ratios suggest better utilization of working capital, while lower ratios may indicate inefficiencies in capital management.

Overall, by analyzing these activity ratios, it can be concluded that Polaris Inc generally demonstrates effective management of its inventory, receivables, payables, and working capital, with some fluctuations indicating potential areas for further improvement or optimization.

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Average number of days

To analyze Polaris Inc's activity ratios, we look at the days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables.

1. Days of Inventory on Hand (DOH): The trend in Polaris Inc's DOH shows fluctuations over the quarters in 2023, ranging from a low of 94.75 days in Q4 to a high of 109.36 days in Q3 2022. Generally, a lower DOH is favorable as it indicates that inventory is being sold quickly and efficiently. It seems that the company improved its inventory management towards the end of 2023.

2. Days of Sales Outstanding (DSO): Polaris Inc's DSO also fluctuates, with the lowest being 11.27 days in Q1 2022 and the highest at 21.35 days in Q3 2023. Lower DSO indicates that the company is collecting its accounts receivable faster, which is positive. The increase in DSO in Q3 2023 may suggest potential issues with collections efficiency.

3. Number of Days of Payables: The number of days of payables remained relatively consistent over the quarters, ranging from 37.32 days in Q4 2023 to 56.29 days in Q1 2022. A longer period of payables can indicate that the company is taking longer to pay its suppliers, which may help with cash flow management, but could strain supplier relationships if prolonged.

Overall, Polaris Inc's activity ratios suggest some variability in managing inventory, collecting receivables, and paying suppliers. The company should focus on optimizing its inventory levels, improving collections efficiency, and maintaining good relationships with suppliers to enhance its overall liquidity and operational efficiency.

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Long-term

Long-term activity ratios provide insights into how effectively a company is utilizing its assets to generate revenue. For Polaris Inc, the fixed asset turnover ratio has been relatively stable over the past eight quarters, ranging from 7.44 to 8.33. This indicates that for every dollar invested in fixed assets, Polaris generates between $7.44 and $8.33 in sales. A high fixed asset turnover ratio suggests efficient utilization of fixed assets.

In contrast, the total asset turnover ratio for Polaris has fluctuated slightly, with values ranging from 1.55 to 1.67 over the same period. This ratio indicates how well the company uses all its assets to generate revenue. A total asset turnover ratio below 1 suggests that assets are not being efficiently utilized to generate sales. Polaris's total asset turnover ratio has generally remained above 1, indicating that the company is effectively generating revenue from its total assets.

Overall, Polaris Inc's long-term activity ratios suggest that the company is efficiently utilizing both fixed and total assets to generate sales. Monitoring these ratios over time can provide valuable insights into the company's operational efficiency and asset management strategies.