Resideo Technologies Inc (REZI)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company generates revenue from its assets and manages its working capital.

1. Inventory turnover: Resideo Technologies Inc's inventory turnover has remained relatively stable over the past five years, ranging from 4.72 to 5.79 times. This indicates that the company is effectively managing its inventory levels and selling its products efficiently.

2. Receivables turnover: The company's receivables turnover has also been consistent, varying between 5.88 and 6.67 times. This demonstrates that Resideo is efficient in collecting payments from customers and managing its accounts receivables effectively.

3. Payables turnover: Resideo's payables turnover has shown a consistent trend, ranging from 4.01 to 5.15 times. A higher payables turnover ratio indicates that the company is paying its suppliers quickly, which can help maintain good relationships with vendors.

4. Working capital turnover: The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate revenue. Resideo's working capital turnover has fluctuated significantly over the past five years, with the highest ratio recorded in 2019 at 17.14 times. This indicates that the company was generating significant revenue relative to its working capital that year.

Overall, Resideo Technologies Inc's activity ratios suggest that the company is effectively managing its assets and working capital to generate revenue efficiently.

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Average number of days

Activity ratios provide insight into a company's efficiency in managing its operating assets and liabilities. For Resideo Technologies Inc, the days of inventory on hand (DOH) have shown an increasing trend over the past five years, reaching 75.55 days in 2023. This indicates that the company is holding onto its inventory for a longer period, which may suggest slower inventory turnover.

In terms of days of sales outstanding (DSO), the company has managed to reduce this metric from 59.78 days in 2019 to 56.90 days in 2023. A lower DSO implies that Resideo is collecting its accounts receivable more quickly, which is a positive sign of efficient credit management.

The number of days of payables for Resideo has fluctuated over the years but has notably decreased from 88.41 days in 2019 to 72.66 days in 2023. A lower number of days of payables indicates that the company is paying its suppliers more quickly, potentially improving relationships and securing better terms.

Overall, while Resideo has shown improvements in its collection of accounts receivable and payment of payables, there is room for optimization in managing inventory to enhance overall operational efficiency.

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Long-term

The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate revenues. Resideo Technologies Inc's fixed asset turnover has fluctuated over the past five years, ranging from a low of 15.78 in 2019 to a high of 20.37 in 2021. The latest ratio of 16.01 in 2023 indicates that the company generated $16.01 in sales for every $1 invested in fixed assets. This suggests that Resideo is effectively utilizing its fixed assets to generate revenue, although there has been a slight decrease in efficiency compared to the previous year.

On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from all of its assets. Resideo's total asset turnover has been relatively stable over the past five years, hovering around 1.00. The latest ratio of 0.94 in 2023 indicates that the company generated $0.94 in sales for every $1 of total assets. This suggests that Resideo may not be fully maximizing the utilization of all its assets to generate revenue, as there has been a slight downward trend in this ratio since 2021.

Overall, the analysis of Resideo Technologies Inc's long-term activity ratios shows that the company has been efficient in utilizing its fixed assets to generate revenue, although there may be room for improvement in optimizing the utilization of its total assets to drive sales growth.