RXO Inc. (RXO)

Short-term

Turnover ratios

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

1. Inventory turnover: This ratio was not provided in the data table. A higher inventory turnover ratio indicates that RXO Inc. is selling its inventory quickly, which can reduce the risk of obsolescence and improve cash flow.

2. Receivables turnover: The receivables turnover ratio shows that on average, RXO Inc. collected receivables approximately 5.38 times during the year. A higher ratio indicates that the company is efficiently collecting payments from customers.

3. Payables turnover: RXO Inc. had an average payables turnover of approximately 8.59, indicating that the company pays its suppliers approximately 8.59 times per year. A higher payables turnover ratio suggests that the company is managing its payables well and may benefit from favorable credit terms.

4. Working capital turnover: The working capital turnover ratio reveals that RXO Inc. generated revenue approximately 24.84 times the average working capital held during the year. A higher ratio indicates efficient utilization of working capital in generating sales.

Overall, based on the activity ratios provided, RXO Inc. demonstrates efficient management of receivables, payables, and working capital. Further analysis of the inventory turnover ratio would provide a more comprehensive assessment of the company's operational efficiency.

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Average number of days

Based on the activity ratios provided for RXO Inc., we can see that there has been an improvement in Days of Sales Outstanding (DSO) during the period from June 30, 2023, to December 31, 2023. DSO decreased from 64.10 days to 69.08 days, indicating that the company is collecting its accounts receivable more efficiently.

Additionally, RXO Inc. has managed to slightly decrease the Number of Days of Payables from 41.22 days on June 30, 2023, to 42.15 days on December 31, 2023. This suggests that the company is taking a shorter time to settle its payables to suppliers.

Unfortunately, the Days of Inventory on Hand (DOH) data is not provided, so we do not have insights into the efficiency of RXO Inc.'s inventory management.

Overall, the improvement in DSO and the modest decrease in the Number of Days of Payables are positive signs for RXO Inc.'s liquidity and efficiency in managing accounts receivable and payables. However, a more comprehensive analysis incorporating the DOH ratio would provide a clearer picture of the company's overall activity ratios.

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Long-term

The long-term activity ratios of RXO Inc. provide insights into the efficiency with which the company utilizes its fixed assets and total assets to generate revenue.

The fixed asset turnover ratio measures how efficiently the company is using its fixed assets to generate sales. The trend shows an increasing pattern from 2023 Q1 to 2023 Q3, which indicates that the company is becoming more efficient in utilizing its fixed assets to generate sales. A higher fixed asset turnover ratio signifies that the company is generating more sales relative to its investment in fixed assets.

On the other hand, the total asset turnover ratio reflects the efficiency of the company in utilizing all its assets, including both fixed and current assets, to generate revenue. The trend for the total asset turnover ratio fluctuates slightly over the three quarters, but the ratios are relatively close to each other. A total asset turnover ratio of above 1 indicates that the company is generating more sales relative to its total assets.

Overall, the increasing trend in the fixed asset turnover ratio suggests that RXO Inc. has been improving its efficiency in utilizing fixed assets to generate sales, while the stable total asset turnover ratio indicates consistent efficiency in utilizing all assets to generate revenue.