Somnigroup International Inc. (SGI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.79 | 5.17 | 5.98 | 6.53 | 6.77 |
| Receivables turnover | 10.80 | 11.65 | 11.75 | 9.58 | 8.35 |
| Payables turnover | 8.98 | 7.98 | 6.42 | 6.29 | 7.01 |
| Working capital turnover | 25.26 | 23.00 | 22.19 | — | 24.48 |
Somnigroup International Inc.'s inventory turnover has been gradually decreasing over the years, indicating a longer time taken to sell its inventory. This could suggest potential issues with managing inventory levels efficiently or challenges in converting inventory into sales.
On the other hand, the receivables turnover ratio has been steadily increasing, reflecting an improvement in the company's ability to collect outstanding receivables promptly. This shows that Somnigroup has become more efficient in converting credit sales into cash, which is a positive sign for its cash flow management.
The payables turnover ratio has been fluctuating inconsistently, with a noticeable increase in 2022 and 2023. This implies that the company is taking a longer time to pay its creditors, which can possibly strain supplier relationships if not managed effectively.
The working capital turnover ratio reflects the company's ability to generate revenue relative to its working capital. Somnigroup has shown relatively stable performance in utilizing its working capital to generate sales, except for a missing value in 2020. This ratio indicates the efficiency of the company in utilizing its resources to generate revenue.
Overall, the analysis of Somnigroup International Inc.'s activity ratios suggests areas that may require attention such as managing inventory more efficiently and maintaining a consistent approach to managing payables. Nonetheless, the improvement in receivables turnover is a positive indicator of the company's effectiveness in collecting outstanding receivables.
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 | 63.05 | 70.54 | 61.08 | 55.88 | 53.91 |
| Days of sales outstanding (DSO) | days | 33.81 | 31.34 | 31.05 | 38.09 | 43.72 |
| Number of days of payables | days | 40.63 | 45.73 | 56.88 | 58.03 | 52.09 |
Somnigroup International Inc.'s activity ratios provide insight into how efficiently the company manages its inventory, collects receivables, and pays its suppliers.
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows an increasing number of days required to sell its inventory over the years, from 53.91 days in 2019 to 70.54 days in 2022, but dipped slightly to 63.05 days in 2023.
- This suggests that Somnigroup International Inc. is taking longer to convert its inventory into sales, which could indicate overstocking or slowing demand.
2. Days of Sales Outstanding (DSO):
- DSO has shown a fluctuating trend, decreasing from 43.72 days in 2019 to 31.05 days in 2021, before slightly increasing to 33.81 days by the end of 2023.
- A decreasing DSO indicates that the company is collecting receivables more quickly, which is a positive sign of efficient credit and collection policies.
3. Number of Days of Payables:
- The days of payables trend demonstrates fluctuation, dropping from 52.09 days in 2019 to 45.73 days in 2022, before a further decrease to 40.63 days in 2023.
- A decreasing number of days of payables indicates that Somnigroup International Inc. is paying its bills more quickly, which could imply stronger supplier relationships or negotiation power.
In summary, while the company has shown improvements in collecting receivables and paying its bills more quickly, its increasing days of inventory on hand may signal potential issues with inventory management efficiency. A holistic review of these ratios along with other financial metrics is necessary for a comprehensive understanding of Somnigroup International Inc.'s operational efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.17 | 6.81 | 9.51 | 7.24 | 7.13 |
| Total asset turnover | 1.08 | 1.13 | 1.14 | 1.11 | 1.01 |
Based on the provided data, we can analyze the long-term activity ratios of Somnigroup International Inc. using two key ratios: the Fixed Asset Turnover and Total Asset Turnover.
1. Fixed Asset Turnover:
- The Fixed Asset Turnover ratio measures how efficiently a company generates sales from its fixed assets.
- For Somnigroup International Inc., the Fixed Asset Turnover ratio has shown fluctuations over the years. It increased from 7.13 in 2019 to 9.51 in 2021, indicating that the company was able to generate more sales from its fixed assets.
- However, there was a decline in 2022 and 2023 to 6.81 and 6.17, respectively, which may suggest a decrease in the efficiency of utilizing fixed assets to generate revenue during those years.
2. Total Asset Turnover:
- The Total Asset Turnover ratio measures how efficiently a company generates sales from its total assets, including fixed and current assets.
- Somnigroup International Inc. maintained a relatively stable Total Asset Turnover ratio over the years, ranging from 1.01 in 2019 to 1.14 in 2021.
- The slight decrease to 1.08 in 2023 may indicate a marginal decline in the company's overall efficiency in generating sales from its total assets compared to the previous year.
In summary, while the company showed fluctuations in its Fixed Asset Turnover ratio, indicating varying efficiency in utilizing fixed assets to generate sales, the Total Asset Turnover ratio remained relatively stable over the years. This analysis suggests that Somnigroup International Inc. may need to focus on improving the utilization of its fixed assets to enhance long-term operational efficiency and financial performance.