Snap-On Inc (SNA)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.09 | 0.07 | 0.10 | 0.16 | 0.15 |
| Receivables turnover | 3.39 | 3.38 | 3.45 | 3.07 | 3.07 |
| Payables turnover | 0.39 | 0.25 | 0.29 | 0.54 | 0.56 |
| Working capital turnover | 1.88 | 2.02 | 2.22 | 2.06 | 2.84 |
Snap-On Inc's activity ratios reflect how efficiently the company manages its inventory, receivables, payables, and working capital.
1. Inventory Turnover: Snap-On Inc's inventory turnover has fluctuated over the years, with a sharp decline in 2022 followed by a slight increase in 2023. The low inventory turnover indicates that the company is inefficient in selling its inventory, which could result in higher carrying costs and potential risks of obsolescence.
2. Receivables Turnover: The receivables turnover ratio has been relatively stable over the years, indicating that Snap-On Inc effectively collects its accounts receivable. A high turnover ratio suggests that the company efficiently converts credit sales into cash, improving its cash flow and liquidity position.
3. Payables Turnover: The payables turnover ratio has also varied, with a significant jump in 2022 followed by a slight decrease in 2023. A low payables turnover ratio may imply that the company is taking a longer time to pay its suppliers, which could strain relationships or indicate potential liquidity issues.
4. Working Capital Turnover: The working capital turnover ratio has declined gradually over the years, indicating that Snap-On Inc may be less efficient in utilizing its working capital to generate sales. A lower ratio suggests that the company may be tying up more capital in its operations without a corresponding increase in sales.
Overall, Snap-On Inc's activity ratios reveal areas of strength and weakness in its operations, highlighting the importance of ongoing monitoring and potential efficiency improvements in managing inventory, receivables, payables, and working capital.
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 | 3,960.66 | 5,303.54 | 3,622.06 | 2,283.93 | 2,500.41 |
| Days of sales outstanding (DSO) | days | 107.62 | 108.07 | 105.89 | 118.83 | 118.93 |
| Number of days of payables | days | 937.11 | 1,473.35 | 1,250.91 | 681.97 | 652.73 |
Snap-On Inc's activity ratios can provide insights into the efficiency of the company's operations in managing its inventory, collecting receivables, and paying its payables.
1. Days of Inventory on Hand (DOH): This ratio measures the average number of days it takes for Snap-On Inc to sell its inventory. A lower number indicates faster inventory turnover. Snap-On's DOH has been fluctuating over the years, with a significant increase in 2022 followed by a decrease in 2023. The company should aim to reduce the number of days inventory is held to free up working capital and improve efficiency.
2. Days of Sales Outstanding (DSO): DSO reflects the average number of days it takes for Snap-On Inc to collect on its accounts receivable. A lower DSO indicates faster collection of sales. Snap-On has managed to maintain a relatively stable DSO over the years, with a slight decrease in 2023. This suggests effective credit and collection practices in place.
3. Number of Days of Payables: This ratio measures the average number of days Snap-On Inc takes to pay its suppliers. A higher number of days indicates the company is taking longer to settle its payables. Snap-On's days of payables have been fluctuating, with an increase in 2022 and 2023 compared to previous years. The company may be stretching out its payables to manage cash flow, but it's important to maintain good relationships with suppliers by ensuring timely payments.
Overall, Snap-On Inc should continue to monitor and manage its activity ratios to optimize its working capital management and improve overall operational efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 9.51 | 9.50 | 8.96 | 7.59 | 7.92 |
| Total asset turnover | 0.68 | 0.69 | 0.68 | 0.60 | 0.71 |
The fixed asset turnover ratio measures how efficiently a company generates sales relative to its investment in fixed assets. In the case of Snap-On Inc, the fixed asset turnover has been consistently high over the past five years, ranging from 7.59 to 9.51. This indicates that Snap-On is effectively using its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from its total assets. Snap-On's total asset turnover has been relatively stable, hovering around 0.68 to 0.71 over the same period. This suggests that the company is able to generate sales in relation to its total asset base.
Overall, the high fixed asset turnover ratio coupled with a stable total asset turnover ratio indicate that Snap-On Inc is efficiently utilizing its assets to drive revenue growth. This efficiency in asset utilization is a positive sign for the company's long-term operational performance and overall financial health.