Regal Beloit Corporation (RRX)

Short-term

Turnover ratios

Activity ratios provide insight into how efficiently a company is managing its assets and liabilities. Let's analyze the activity ratios of Regal Rexnord Corp:

1. Inventory turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory during a period.
- Regal Rexnord Corp's inventory turnover has been increasing over the last five years, reaching 3.28 in 2023 from 3.50 in 2019.
- This indicates that the company is managing its inventory more efficiently, selling products at a faster rate.

2. Receivables turnover:
- The receivables turnover ratio reflects how well a company is collecting its accounts receivable.
- Regal Rexnord Corp's receivables turnover has been relatively stable over the years, with a slight increase to 6.78 in 2023 from 7.02 in 2019.
- This suggests that the company has been consistent in collecting payments from customers.

3. Payables turnover:
- The payables turnover ratio shows how quickly a company pays its suppliers.
- Regal Rexnord Corp's payables turnover has been steadily increasing over the years, reaching 7.61 in 2023 from 7.05 in 2019.
- This indicates that the company is taking longer to pay its suppliers, potentially improving its cash flow position.

4. Working capital turnover:
- The working capital turnover ratio measures how efficiently a company uses its working capital to generate sales.
- Regal Rexnord Corp's working capital turnover has shown an increasing trend, reaching 3.04 in 2023 from 3.09 in 2019.
- This suggests that the company is effectively using its working capital to support its operations and generate revenue.

In summary, Regal Rexnord Corp has shown improvements in managing its inventory, collections from customers, and payments to suppliers over the years. The increasing trend in working capital turnover also indicates efficient utilization of resources to drive sales.

---

Average number of days

Regal Rexnord Corp's activity ratios reflect its efficiency in managing inventory, collecting receivables, and paying suppliers over the years. The Days of Inventory on Hand (DOH) has shown a decreasing trend from 148.25 days in 2022 to 111.17 days in 2023, indicating that the company has been more effective in managing its inventory levels and turning inventory into sales.

The Days of Sales Outstanding (DSO) has fluctuated over the years but has generally remained within a reasonable range, demonstrating the company's ability to collect receivables in a timely manner. In 2023, the DSO decreased to 53.82 days, indicating faster collection of receivables compared to the previous year.

The Number of Days of Payables has also varied, with some fluctuations observed across the years. The decrease in days of payables from 86.25 days in 2022 to 47.93 days in 2023 suggests that the company has been paying its suppliers more promptly in recent years.

Overall, the declining trend in Days of Inventory on Hand and the improvement in Days of Sales Outstanding indicate that Regal Rexnord Corp has been efficiently managing its working capital and operating cycle, which could lead to improved cash flow and profitability in the future.

---

Long-term

The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate sales revenue. In the case of Regal Rexnord Corp, the fixed asset turnover ratio has exhibited some fluctuation over the past five years, with values ranging from 4.19 to 6.47. The company's fixed asset turnover ratio decreased from 6.47 in 2022 to 6.00 in 2023, indicating a slightly less efficient utilization of fixed assets to generate sales.

On the other hand, the total asset turnover ratio measures the efficiency of a company in generating sales revenue relative to its total assets. Regal Rexnord Corp's total asset turnover ratio has also varied over the years, with values ranging from 0.37 to 0.73. The significant decrease in the total asset turnover ratio from 0.51 in 2022 to 0.41 in 2023 suggests a decline in the company's overall efficiency in generating sales revenue relative to its total assets.

Overall, the trend in both the fixed asset turnover and total asset turnover ratios for Regal Rexnord Corp indicates some fluctuations in asset utilization efficiency, which may warrant further investigation to identify the underlying factors driving these changes.