Sturm Ruger & Company Inc (RGR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.14 | 6.40 | 10.29 | 12.98 | 10.99 |
| Receivables turnover | 9.08 | 9.10 | 12.81 | 9.83 | 7.80 |
| Payables turnover | 36.95 | 31.30 | 36.95 | 29.50 | 37.29 |
| Working capital turnover | 2.61 | 3.00 | 2.90 | 3.73 | 2.18 |
Sturm, Ruger & Co., Inc.'s activity ratios provide insights into how efficiently the company manages its assets and liabilities to generate sales.
1. Inventory turnover: The inventory turnover ratio measures how many times a company sells and replaces its inventory within a given period. Sturm, Ruger & Co., Inc. experienced a decreasing trend in inventory turnover from 2019 to 2023, indicating slower inventory turnover. This may suggest either overstocking or a decrease in sales volume relative to inventory levels.
2. Receivables turnover: The receivables turnover ratio indicates how quickly the company collects payments from its customers. Sturm, Ruger & Co., Inc. maintained relatively stable receivables turnover ratios over the five-year period. A higher ratio suggests a more efficient collection process, and the company's consistent performance in this aspect is a positive sign of effective credit management.
3. Payables turnover: The payables turnover ratio shows how quickly a company pays its suppliers. Sturm, Ruger & Co., Inc. improved its payables turnover from 2019 to 2023, indicating a more efficient management of its trade payables. A higher ratio can imply better negotiation leverage with suppliers or improved cash flow management.
4. Working capital turnover: The working capital turnover ratio measures how efficiently the company utilizes its working capital to generate revenue. Sturm, Ruger & Co., Inc. experienced fluctuations in this ratio over the period, with a notable decrease in 2023 compared to 2020. A lower ratio may indicate inefficiencies in managing working capital or a decline in revenue generation from the available resources.
In summary, while Sturm, Ruger & Co., Inc. showed consistent performance in receivables turnover and improvement in payables turnover, the decreasing trends in inventory turnover and working capital turnover raise potential concerns about inventory management and overall operational efficiency. Further analysis is recommended to identify the underlying factors contributing to these trends and address any inefficiencies to enhance the company's profitability and liquidity.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 71.02 | 57.06 | 35.47 | 28.12 | 33.22 |
| Days of sales outstanding (DSO) | days | 40.18 | 40.09 | 28.49 | 37.13 | 46.80 |
| Number of days of payables | days | 9.88 | 11.66 | 9.88 | 12.37 | 9.79 |
Sturm, Ruger & Co., Inc.'s activity ratios reflect the efficiency of the company in managing its inventory, collecting receivables, and paying its suppliers.
The Days of Inventory on Hand (DOH) increased from 33.22 days in 2019 to 71.02 days in 2023, indicating that the company is now holding inventory for a longer period before it is sold. This trend may suggest a potential excess inventory buildup or slowing sales, which could tie up working capital and lead to increased holding costs.
The Days of Sales Outstanding (DSO) remained relatively stable over the years, ranging between 28.49 days in 2021 and 46.80 days in 2019. This metric indicates that Sturm, Ruger & Co., Inc. typically collects payment from customers within about a month to a month and a half of making a sale.
The Number of Days of Payables decreased from 9.79 days in 2019 to 9.88 days in 2023, with slight fluctuations in between. This suggests that the company has been maintaining a consistent approach in paying its suppliers within around 10 days of receiving the invoice, potentially benefiting from any available discounts for early payments.
Overall, the activity ratios of Sturm, Ruger & Co., Inc. indicate room for improvement in managing inventory levels to avoid potential overstock, while maintaining a healthy balance in collecting receivables and paying suppliers in a timely manner. Potential strategies for the company could involve streamlining inventory processes, enhancing sales collection efforts, and optimizing payment terms with suppliers to improve overall efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 7.60 | 7.75 | 9.92 | 8.04 | 5.55 |
| Total asset turnover | 1.36 | 1.23 | 1.65 | 1.63 | 1.18 |
Sturm, Ruger & Co., Inc.'s long-term activity ratios reflect the efficiency with which the company utilizes its assets over an extended period. The fixed asset turnover ratio has fluctuated over the past five years, ranging from a high of 9.92 in 2021 to a low of 5.55 in 2019. This ratio indicates that in 2023, the company generated $7.60 in sales for every $1 of fixed assets, suggesting a high level of efficiency in utilizing its long-term assets to generate revenue.
On the other hand, the total asset turnover ratio has also varied, with a peak of 1.65 in 2021 and a low of 1.18 in 2019. In 2023, the company generated $1.36 in sales for every $1 of total assets. This ratio reflects the overall efficiency of the company in using all its assets to generate revenue.
The trend observed in both ratios indicates that the company has generally been effective in utilizing its assets to generate sales. The varying levels across years suggest fluctuations in asset utilization efficiency, with some years showing more efficiency than others. Overall, Sturm, Ruger & Co., Inc. has demonstrated a consistent effort to optimize its long-term asset utilization for revenue generation.