Powell Industries Inc (POWL)

Short-term

Turnover ratios

The activity ratios of Powell Industries Inc provide insights into the efficiency of the company's operations in managing its inventory, receivables, payables, and working capital.

1. Inventory turnover:
- The inventory turnover has gradually decreased from 17.02 in 2020 to 9.60 in 2024.
- This indicates that Powell Industries Inc is holding onto its inventory for a longer period in recent years, which may suggest that the company is facing challenges in selling its products efficiently.

2. Receivables turnover:
- The receivables turnover ratio has fluctuated over the years, with a significant increase in 2024 compared to the previous year.
- This variability suggests that Powell Industries Inc has been effective at collecting its receivables in certain years but may have experienced challenges in others.

3. Payables turnover:
- The payables turnover has also fluctuated over the years, with a peak in 2020 followed by a decline and then a slight increase in 2024.
- This pattern indicates that the company's ability to manage its payables efficiently has been inconsistent.

4. Working capital turnover:
- The working capital turnover ratio has shown a similar fluctuating pattern over the years, although it has remained relatively stable overall.
- This ratio indicates how effectively Powell Industries Inc is utilizing its working capital to generate sales revenue, with a higher ratio suggesting better efficiency.

In summary, while the inventory turnover, receivables turnover, payables turnover, and working capital turnover ratios of Powell Industries Inc have demonstrated fluctuations over the years, there are areas where the company could potentially improve its operational efficiency to enhance its overall financial performance.

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Average number of days

The activity ratios of Powell Industries Inc provide insights into the efficiency of the company's operations in managing its inventory, accounts receivable, and accounts payable.

1. Days of Inventory on Hand (DOH): This ratio indicates how many days, on average, it takes for Powell Industries Inc to sell its inventory. The trend shows an increasing pattern over the years, with the DOH increasing from 21.44 days in 2020 to 38.03 days in 2024. This suggests that the company may be carrying more inventory relative to its sales, which can tie up funds and impact profitability.

2. Days of Sales Outstanding (DSO): DSO reflects the average number of days it takes for Powell Industries Inc to collect payment from its customers. The DSO has been fluctuating over the years, peaking at 53.92 days in 2023 and then decreasing to 38.66 days in 2024. A higher DSO indicates that the company is taking longer to collect payments, affecting its cash flow and liquidity.

3. Number of Days of Payables: This ratio represents the average number of days it takes for Powell Industries Inc to pay its suppliers. The trend shows some variability, with the number of days of payables ranging from 25.93 days in 2020 to 44.66 days in 2022. A longer number of days of payables may indicate that the company is taking longer to settle its payables, potentially impacting supplier relationships.

Overall, analyzing these activity ratios reveals areas where Powell Industries Inc may need to focus on improving efficiency in managing its inventory, collecting receivables, and paying its suppliers promptly to enhance its overall operational performance.

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Long-term

Powell Industries Inc's long-term activity ratios indicate the efficiency with which the company is utilizing its fixed and total assets to generate sales. The fixed asset turnover ratio has shown a consistent upward trend over the past five years, increasing from 8.60 in 2021 to 19.58 in 2024. This suggests that Powell Industries Inc has been able to generate significantly more sales per dollar of fixed assets invested, reflecting improved efficiency in utilizing its long-term assets.

On the other hand, the total asset turnover ratio has fluctuated over the same period, reaching its peak in 2022 at 2.16 before declining slightly to 2.18 in 2024. This indicates that Powell Industries Inc's ability to generate sales from all its assets has been relatively steady, with a minor improvement in the most recent year.

Overall, the company has demonstrated strong efficiency in utilizing its fixed assets to generate sales, as seen in the increasing trend of the fixed asset turnover ratio. While the total asset turnover ratio has fluctuated somewhat, it remains at a reasonable level, indicating that Powell Industries Inc is effectively utilizing its total assets to generate revenue.