Thor Industries Inc (THO)

Short-term

Turnover ratios

Thor Industries Inc's activity ratios provide valuable insights into how efficiently the company manages its assets and liabilities.

1. Inventory Turnover:
- Thor's inventory turnover has been relatively stable over the past five years, ranging from 6.37 to 10.88 times.
- The increasing trend in inventory turnover from 2020 to 2022 indicates that the company has been selling its inventory at a faster rate, which is a positive sign of efficiency.
- However, the slight decrease in 2023 and 2024 could suggest either inventory management challenges or changes in the company's sales strategies.

2. Receivables Turnover:
- Thor Industries Inc has shown a consistent and impressive increase in receivables turnover over the years, reaching a high of 20.28 times in 2023.
- A high receivables turnover ratio indicates that the company is collecting its accounts receivable quickly, which is a positive indicator of strong cash flow management.
- The stable performance of this ratio reflects Thor's effective credit policies and efficient collection practices.

3. Payables Turnover:
- Thor's payables turnover has shown fluctuations over the years, with a peak in 2022 at 17.97 times.
- A higher payables turnover ratio signifies that the company is paying its suppliers more frequently, which could imply improved relationships with suppliers.
- The variability in this ratio suggests changes in Thor's payment terms and relationships with vendors, which may impact its working capital management.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently Thor generates sales revenue from its working capital.
- Thor Industries Inc's working capital turnover has been relatively stable, indicating that the company has been effectively utilizing its working capital to generate sales.
- The consistent performance of this ratio over the years signifies Thor's ability to efficiently manage its current assets and liabilities to support its operations.

Overall, while there have been fluctuations in some activity ratios, Thor Industries Inc appears to have a solid foundation in managing its inventory, receivables, payables, and working capital effectively to support its business operations.

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Average number of days

Thor Industries Inc's activity ratios provide insights into the efficiency of its operations related to managing inventory, collecting receivables, and paying its suppliers.

1. Days of Inventory on Hand (DOH):
- Thor Industries' DOH has fluctuated over the past five years, ranging from 33.56 days in 2020 to 57.26 days in 2023.
- A decrease in DOH from 2023 to 2022 indicates that the company managed its inventory more efficiently, but the increase in 2024 signifies a potential build-up of inventory.
- Thor Industries should focus on optimizing its inventory management to avoid excess holding costs or potentially obsolete inventory.

2. Days of Sales Outstanding (DSO):
- Thor Industries' DSO has been relatively stable over the past five years, ranging from 18.00 days in 2023 to 26.64 days in 2020.
- The lower DSO indicates efficient collection of accounts receivable and a faster turnover of sales into cash.
- Maintaining a low DSO is crucial for ensuring a healthy cash flow and liquidity position.

3. Number of Days of Payables:
- Thor Industries' days of payables have varied over the years, with the lowest at 20.31 days in 2022 and the highest at 29.82 days in 2020.
- A higher number of days of payables indicates that the company takes longer to settle its payables, potentially benefiting from extended payment terms.
- However, a significant increase in payables days from 2022 to 2023 suggests a possible change in the company's payment policies.

Overall, Thor Industries should strive to strike a balance between managing its inventory efficiently, collecting receivables promptly, and optimizing payment terms with suppliers to enhance its working capital management and overall financial performance.

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Long-term

Based on the data provided, Thor Industries Inc's long-term activity ratios indicate how efficiently the company is utilizing its assets to generate sales revenue over the past five years.

1. Fixed Asset Turnover:
- Thor Industries Inc's fixed asset turnover has shown some fluctuation over the years, with a significant decrease from 2019 to 2020, followed by an increase in subsequent years.
- The company's fixed asset turnover ratio ranged from 7.23 to 12.90 during the period under review, implying that, on average, for every dollar invested in fixed assets, Thor generated sales between 7.23 to 12.90 times.
- A higher fixed asset turnover ratio is generally favorable, indicating that the company is efficiently utilizing its fixed assets to generate revenue. Therefore, Thor's performance in this aspect has been relatively strong.

2. Total Asset Turnover:
- The total asset turnover ratio also showed variability from year to year, although not as pronounced as the fixed asset turnover ratio.
- Thor's total asset turnover ratio ranged from 1.40 to 2.19 during the period, suggesting that, on average, the company generated revenues equivalent to 1.40 to 2.19 times its total assets.
- A higher total asset turnover ratio indicates better efficiency in asset utilization and revenue generation. While Thor's performance in this area has been somewhat inconsistent, the ratios generally indicate that the company is effectively utilizing its assets to generate sales.

In conclusion, based on the trend analysis of Thor Industries Inc's long-term activity ratios, the company demonstrates a solid ability to generate sales revenue relative to its investment in fixed and total assets. The improvements in the fixed asset turnover ratio over the years reflect increased efficiency in utilizing fixed assets, while the relatively stable total asset turnover ratios indicate a reasonable level of asset efficiency.