RPC Inc (RES)

Short-term

Turnover ratios

Activity ratios provide insight into how efficiently a company is managing its assets and liabilities.

1. Inventory turnover: The inventory turnover ratio indicates how many times a company sells and replaces its inventory during a specific period. RPC, Inc.'s inventory turnover has fluctuated over the past five years, ranging from a low of 5.80 in 2020 to a high of 11.21 in 2022. A higher turnover ratio generally indicates efficient inventory management.

2. Receivables turnover: The receivables turnover ratio measures how many times a company collects its accounts receivable during a period. RPC, Inc.'s receivables turnover ratio has also varied over the years, with a low of 2.44 in 2020 and a high of 4.58 in 2019. A higher ratio suggests faster collection of receivables.

3. Payables turnover: The payables turnover ratio indicates how many times a company pays off its accounts payable during a period. RPC, Inc.'s payables turnover has ranged from 8.91 in 2021 to 17.30 in 2019. A higher ratio may suggest that the company is managing its payables efficiently.

4. Working capital turnover: The working capital turnover ratio shows how effectively a company is using its working capital to generate sales revenue. RPC, Inc.'s working capital turnover has fluctuated over the years, with a high of 3.64 in 2019 and a low of 1.72 in 2020. A higher ratio generally indicates good utilization of working capital.

Overall, analyzing these activity ratios over time can help assess RPC, Inc.'s efficiency in managing key operational aspects such as inventory, receivables, payables, and working capital.

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Average number of days

Activity ratios provide insights into how efficiently a company is managing its resources and operations. Let's analyze the activity ratios of RPC, Inc. based on the provided data:

1. Days of Inventory on Hand (DOH):
- The trend in RPC, Inc.'s days of inventory on hand indicates fluctuation over the five-year period, with the highest level in 2020 (62.96 days) and the lowest level in 2022 (32.57 days).
- A lower DOH value, as seen in 2022, indicates that RPC, Inc. is holding less inventory on hand, which could suggest improved inventory management efficiency during that year.

2. Days of Sales Outstanding (DSO):
- RPC, Inc.'s days of sales outstanding show variability over the five-year period, with the highest level in 2022 (149.29 days) and the lowest level in 2019 (79.64 days).
- A lower DSO value, such as in 2019, indicates that RPC, Inc. is collecting receivables from customers more quickly, which could positively impact cash flow and liquidity.

3. Number of Days of Payables:
- The trend in the number of days of payables for RPC, Inc. demonstrates some fluctuation, with the highest value in 2022 (38.65 days) and the lowest value in 2019 (21.09 days).
- A lower number of days of payables, like in 2019, suggests that RPC, Inc. is paying its suppliers more quickly, which may signal strong supplier relationships or potentially adverse cash flow implications.

In interpreting these activity ratios, it is essential for RPC, Inc. to strike a balance between managing inventory levels efficiently, collecting receivables promptly, and optimizing payment terms with suppliers to maximize operational performance and financial health.

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Long-term

The long-term activity ratios of RPC, Inc., namely the fixed asset turnover and total asset turnover, indicate the efficiency with which the company is utilizing its assets to generate sales.

1. Fixed asset turnover:
- The fixed asset turnover ratio measures how effectively the company is utilizing its fixed assets to generate revenue. It is calculated by dividing net sales by average fixed assets.
- In this case, RPC, Inc.'s fixed asset turnover has fluctuated over the past five years, ranging from 2.26 to 4.81. A higher fixed asset turnover ratio indicates that the company is generating more sales from its fixed assets.
- The trend shows an improvement in the utilization of fixed assets from 2019 to 2022, with a significant peak in 2022 at 4.81. However, there was a decline in 2023 to 3.72.
- Overall, the company has been efficient in generating revenue from its fixed assets, with the ratio generally above 2.0, except for 2020.

2. Total asset turnover:
- The total asset turnover ratio measures how well the company is utilizing all of its assets to generate sales. It is calculated by dividing net sales by average total assets.
- RPC, Inc.'s total asset turnover has also varied over the past five years, ranging from 0.76 to 1.42. A higher total asset turnover ratio indicates that the company is efficient in generating sales from all its assets.
- The company showed a significant improvement in total asset turnover from 2019 to 2022, peaking at 1.42 in 2022 before decreasing slightly to 1.26 in 2023.
- The trend indicates that RPC, Inc. has been getting more revenue from its total assets over the years, reflecting improved efficiency in asset utilization.

In conclusion, the analysis of RPC, Inc.'s long-term activity ratios suggests that the company has shown efficiency in utilizing both fixed assets and total assets to generate sales, with improvements seen over the years. However, the fluctuations in the ratios indicate the need for continued monitoring of the company's asset utilization efficiency.