Plexus Corp (PLXS)

Short-term

Turnover ratios

Activity ratios provide insight into how efficiently a company is managing its resources and generating revenue. Let's analyze the activity ratios of Plexus Corp:

1. Inventory turnover: Plexus Corp's inventory turnover has been fluctuating over the past five years, with a downward trend from 4.25 in 2020 to 2.90 in 2024. This indicates that the company is selling its inventory at a slower rate. A lower inventory turnover could suggest overstocking or potential sales slowdown, which may impact liquidity and profitability.

2. Receivables turnover: Plexus Corp's receivables turnover has remained relatively stable over the years, indicating that the company is efficiently collecting payments from its customers. A higher turnover ratio suggests that the company is effectively managing its accounts receivable and converting credit sales into cash quickly.

3. Payables turnover: Plexus Corp's payables turnover has also remained relatively steady, indicating that the company is managing its accounts payable effectively. A higher turnover ratio suggests that the company is paying its suppliers promptly, which can help maintain good relationships and potentially negotiate better terms.

4. Working capital turnover: Plexus Corp's working capital turnover has shown a slight decrease over the years, indicating that the company is generating less revenue per dollar of working capital. A lower turnover ratio could suggest that the company is not efficiently utilizing its working capital to drive sales and may need to improve its operational efficiency.

Overall, while Plexus Corp's receivables and payables turnover ratios demonstrate efficient management of accounts receivable and payable, respectively, the downward trend in inventory turnover and working capital turnover warrants further analysis to identify any underlying operational or financial issues that may impact the company's performance.

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Average number of days

The activity ratios provide valuable insights into Plexus Corp's efficiency in managing its inventory, accounts receivable, and accounts payable over the last five years.

1. Days of Inventory on Hand (DOH):
- The trend in DOH indicates a fluctuation over the years, with an increase from 2020 to 2022 and a decrease in 2023 and 2024. Higher DOH values suggest that Plexus Corp may be holding excess inventory, which can tie up capital and lead to increased carrying costs. The decrease in 2023 and 2024 could indicate better inventory management practices or changes in the company's operations.

2. Days of Sales Outstanding (DSO):
- DSO remained relatively stable over the years, indicating consistent collection efficiency in converting sales into cash. A lower DSO value is favorable as it implies quicker conversion of accounts receivable into cash, improving liquidity and cash flow for the company.

3. Number of Days of Payables:
- The days of payables trend shows variability, with a significant increase in 2022 followed by a decline in 2023 and 2024. Higher days of payables suggest that Plexus Corp is taking longer to settle its payables, allowing for potential delays in cash outflows. The decrease from 2022 to 2024 could indicate better relationships with suppliers or changes in payment terms.

Overall, while the company has shown some fluctuations in its activity ratios over the years, there is room for improvement in optimizing inventory levels, accelerating collections from customers, and managing payables effectively to enhance operational efficiency and strengthen financial performance.

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Long-term

The long-term activity ratios of Plexus Corp indicate how effectively the company is utilizing its assets to generate sales. The fixed asset turnover ratio has been consistently high over the past five years, ranging from 16.04 to 17.92. This suggests that Plexus Corp is efficient in generating sales from its fixed assets such as property, plant, and equipment.

On the other hand, the total asset turnover ratio has shown more variability, with values ranging from 2.28 to 3.00 over the same period. This ratio reflects the company's overall ability to generate sales from all its assets, including current and fixed assets. Despite some fluctuations, Plexus Corp has generally maintained a reasonable level of total asset turnover.

Overall, the high fixed asset turnover ratio indicates that Plexus Corp is effectively utilizing its fixed assets to generate revenue. However, the variability in the total asset turnover ratio may warrant further investigation into the company's asset management strategies and how they impact overall sales generation.