Terex Corporation (TEX)

Short-term

Turnover ratios

Terex Corp.'s activity ratios indicate how efficiently the company manages its assets and liabilities to generate sales.

1. Inventory turnover:
- Terex's inventory turnover has shown a declining trend over the past five years, from 4.09 in 2019 to 3.35 in 2023. This may suggest that the company is carrying more inventory relative to its sales, which could tie up capital and lead to potential obsolescence or storage costs.

2. Receivables turnover:
- The receivables turnover ratio has fluctuated over the years but generally remained at healthy levels. An increase in 2023 to 9.40 implies that Terex is collecting its accounts receivable more efficiently, on average, compared to the previous years.

3. Payables turnover:
- Terex's payables turnover has also shown a decreasing trend over the same period, from 6.82 in 2019 to 5.66 in 2023. A decreasing trend in payables turnover could indicate that the company is taking longer to pay its suppliers, potentially straining relationships or losing out on early payment discounts.

4. Working capital turnover:
- The working capital turnover ratio measures how efficiently a company generates revenue from its working capital. Terex's ratio has fluctuated over the years but has generally shown an upward trend, reaching 4.58 in 2023. This suggests that the company is utilizing its working capital more effectively to generate sales compared to previous years.

In summary, while Terex Corp. has experienced fluctuations in its activity ratios over the past five years, emphasizing the need for continuous monitoring and improvement, the company's recent performance in receivables turnover and working capital turnover signals positive trends in managing its assets and liquidity efficiently. However, the declining trends in inventory turnover and payables turnover warrant further investigation to ensure sustainable operational efficiency and cash flow management.

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Average number of days

The activity ratios provide insight into Terex Corp.'s efficiency in managing its inventory, receivables, and payables turnover over the years.

Days of inventory on hand (DOH) have increased steadily from 89.29 days in 2019 to 108.91 days in 2023. This indicates that, on average, Terex holds onto its inventory for a longer period, potentially signaling inefficiencies in inventory management or slower sales turnover.

Days of sales outstanding (DSO) have fluctuated over the years, with a notable increase in 2021 followed by a slight decrease in 2023. The decrease suggests that the company has improved its ability to collect payments from customers in a timely manner, enhancing its liquidity position.

Number of days of payables has also seen an upward trend from 53.52 days in 2019 to 64.52 days in 2023. This indicates that Terex is taking longer to pay its suppliers, possibly to manage its cash flow effectively. However, a significant increase in payables days could potentially strain relationships with suppliers.

Overall, the analysis of activity ratios suggests that Terex Corp. may have challenges in efficiently managing its inventory levels but has shown improvements in collecting receivables. However, the increase in payables days could impact supplier relationships and cash flow management in the long run.

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Long-term

The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate sales. In the case of Terex Corp., the fixed asset turnover ratio has been relatively stable over the past five years, ranging from 7.57 to 11.18, with a notable peak in 2019. This indicates that the company has been consistently effective in generating sales from its fixed assets. A higher fixed asset turnover ratio generally suggests better asset utilization and operational efficiency.

On the other hand, the total asset turnover ratio indicates the company's ability to generate sales from all its assets, including both fixed and current assets. Terex Corp.'s total asset turnover ratio has also remained relatively stable, ranging from 1.01 to 1.42 over the same period. This implies that the company has been able to effectively generate sales in relation to its total asset base. A higher total asset turnover ratio signifies that the company is generating more revenue per dollar of assets, indicating efficient asset management.

Overall, the stable and relatively high fixed asset turnover and total asset turnover ratios suggest that Terex Corp. has been effectively utilizing its assets to drive revenue growth and operational performance over the past five years. This indicates a strong asset management strategy and operational efficiency within the company.