Simpson Manufacturing Company Inc (SSD)

Short-term

Turnover ratios

Simpson Manufacturing Co., Inc.'s activity ratios provide insight into the efficiency of the company's operational activities.

1. Inventory turnover: This ratio indicates how many times during the year the company's inventory was sold and replaced. Simpson Manufacturing Co., Inc.'s inventory turnover has been fairly consistent over the past five years, with a slight decrease in 2021 and 2023 compared to the years prior. This suggests that the company is efficiently managing its inventory levels.

2. Receivables turnover: The receivables turnover ratio measures how many times a company collects its accounts receivable during a specific period. Simpson Manufacturing Co., Inc. has maintained a relatively stable receivables turnover ratio over the years, indicating that the company efficiently collects payments from its customers.

3. Payables turnover: This ratio shows how many times a company pays off its accounts payable during a particular period. Simpson Manufacturing Co., Inc.'s payables turnover has decreased steadily over the past five years. A decreasing payables turnover could indicate that the company is taking longer to pay its suppliers, which may impact relationships with vendors.

4. Working capital turnover: The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate revenue. Simpson Manufacturing Co., Inc.'s working capital turnover has fluctuated slightly over the years but has remained relatively consistent. A higher turnover ratio indicates that the company is effectively using its working capital to generate sales.

Overall, Simpson Manufacturing Co., Inc. appears to have efficient inventory and receivables management practices, but there may be room for improvement in managing payables to maintain strong relationships with suppliers. The company's working capital turnover shows a consistent level of efficiency in utilizing its working capital to drive revenue.

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Average number of days

Simpson Manufacturing Co., Inc.'s activity ratios provide insights into how efficiently the company manages its inventory, accounts receivable, and accounts payable.

1. Days of Inventory on Hand (DOH):
- The trend in DOH indicates that the company held inventory for an average of 172.07 days in 2023, slightly lower than the previous year.
- The higher DOH in 2021 and 2022 suggests that inventory turnover slowed down, possibly due to overstocking or lower demand.
- The decrease in DOH from 2020 to 2021 indicates an improvement in inventory management efficiency.

2. Days of Sales Outstanding (DSO):
- The DSO reflects that on average, it took Simpson Manufacturing Co., Inc. 46.82 days to collect outstanding receivables in 2023, with a slight increase compared to 2022.
- The consistent DSO in the range of 44-47 days over the past years signifies a stable collection process.
- An increase in DSO might indicate difficulties in collecting payments or a loosening credit policy.

3. Number of Days of Payables:
- The company takes approximately 33.54 days to pay its suppliers in 2023, showing an increasing trend in the payment period.
- The longer payment period may indicate favorable terms from suppliers or potential inefficiencies in managing payables.
- There was a notable increase in the number of days of payables from 2019 to 2020, which suggests a deliberate strategy or external factors influencing payment terms.

Overall, Simpson Manufacturing Co., Inc. should continually monitor and improve its activity ratios to optimize its cash conversion cycle and operational efficiency.

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Long-term

Simpson Manufacturing Co., Inc.'s long-term activity ratios provide insights into the company's efficiency in utilizing its fixed assets and total assets to generate sales.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how well the company generates revenue from its investment in fixed assets.
- The trend for Simpson Manufacturing Co., Inc.'s fixed asset turnover shows a slight decline over the past five years, from 4.56 in 2019 to 5.29 in 2023.
- This indicates that the company generated $5.29 in sales for every $1 invested in fixed assets in 2023.
- Despite the fluctuations, the company has maintained a relatively high fixed asset turnover ratio, suggesting efficient management of fixed assets to drive revenue.

2. Total Asset Turnover:
- The total asset turnover ratio reflects the company's ability to generate sales relative to its total assets.
- Simpson Manufacturing Co., Inc.'s total asset turnover has fluctuated over the past five years, from 1.04 in 2019 to 0.82 in 2023.
- The decrease in total asset turnover may indicate that the company is less efficient in utilizing all assets to generate revenue.
- A total asset turnover of 0.82 in 2023 implies that the company generated $0.82 in sales for every $1 of total assets.
- Overall, the trend in total asset turnover suggests that Simpson Manufacturing Co., Inc. might need to focus on improving its utilization of total assets to enhance sales efficiency.

In conclusion, while Simpson Manufacturing Co., Inc. has shown efficient utilization of fixed assets as reflected in its fixed asset turnover ratios, there is room for improvement in optimizing the utilization of total assets to drive sales based on its total asset turnover ratios.