Gentherm Inc (THRM)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.78 | 6.47 | 5.11 | 5.61 | 6.51 |
| Receivables turnover | 5.63 | 5.71 | 4.72 | 5.33 | 3.91 |
| Payables turnover | 5.79 | 6.17 | 6.12 | 7.29 | 6.87 |
| Working capital turnover | 4.22 | 3.99 | 3.00 | 2.96 | 2.06 |
Gentherm Inc's inventory turnover ratio declined from 6.51 in 2020 to 5.78 in 2024, indicating a decrease in the company's ability to efficiently manage its inventory. This may suggest issues like overstocking or slow-moving inventory.
On the other hand, the receivables turnover ratio improved from 3.91 in 2020 to 5.63 in 2024, showing that the company is collecting its receivables more rapidly over the years. This could indicate effective credit management and an improvement in the company's liquidity.
The payables turnover ratio remained relatively stable, varying from 5.79 in 2024 to 7.29 in 2021. A stable payables turnover ratio suggests that Gentherm Inc has been able to manage its payments to suppliers consistently over the years.
The working capital turnover ratio increased from 2.06 in 2020 to 4.22 in 2024, highlighting a positive trend in how efficiently the company is utilizing its working capital to generate revenue. This signifies that Gentherm Inc has been able to convert its working capital into sales at a faster rate over these years.
In conclusion, while there are fluctuations in some activity ratios, Gentherm Inc has shown improvements in its receivables turnover and working capital turnover ratios, which can suggest better liquidity management and operational efficiency.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 63.18 | 56.44 | 71.44 | 65.06 | 56.06 |
| Days of sales outstanding (DSO) | days | 64.88 | 63.94 | 77.30 | 68.53 | 93.36 |
| Number of days of payables | days | 63.03 | 59.16 | 59.65 | 50.07 | 53.15 |
Gentherm Inc's activity ratios provide insight into how efficiently the company manages its inventory, receivables, and payables.
1. Days of Inventory on Hand (DOH):
- The DOH shows the number of days it takes for the company to sell its inventory. Gentherm's DOH has shown an increasing trend over the years, from 56.06 days in 2020 to 63.18 days in 2024. This suggests that the company is holding onto its inventory for a longer period, potentially tying up more capital and indicating room for improvement in inventory management efficiency.
2. Days of Sales Outstanding (DSO):
- The DSO measures how long it takes for the company to collect its receivables. Gentherm's DSO decreased from 93.36 days in 2020 to 64.88 days in 2024, indicating an improvement in collecting receivables more efficiently. A lower DSO implies that the company is collecting payments from customers at a faster rate, resulting in better cash flow management.
3. Number of Days of Payables:
- The number of days of payables measures how long it takes for the company to pay its suppliers. Gentherm's payables days have been relatively stable, ranging from 50.07 days in 2021 to 63.03 days in 2024. This suggests that the company has not significantly changed its payment practices to suppliers over the years.
In summary, Gentherm Inc has made progress in managing its receivables efficiently, as indicated by the decreasing trend in DSO. However, there may be room for improvement in inventory management efficiency, as reflected in the increasing trend in DOH. The stability in the number of days of payables indicates a consistent approach to supplier payments. Overall, the company could focus on optimizing its inventory levels further to enhance operational performance and cash flow management.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.74 | 5.90 | 4.88 | 6.72 | 5.92 |
| Total asset turnover | 1.16 | 1.17 | 0.96 | 1.12 | 0.88 |
The Fixed Asset Turnover ratio measures how efficiently Gentherm Inc is utilizing its fixed assets to generate sales. From the provided data, we observe that the Fixed Asset Turnover ratio has fluctuated over the years, indicating changes in the company's ability to generate revenue from its fixed assets.
In 2021, the ratio increased to 6.72 from 5.92 in 2020, which suggests that the company improved its efficiency in utilizing fixed assets to generate sales. However, in 2022, the ratio decreased to 4.88, indicating a potential decrease in the effectiveness of the company's fixed assets management.
In the subsequent years, the ratio recovered slightly, with values of 5.90 in 2023 and 5.74 in 2024. Overall, the trend in the Fixed Asset Turnover ratio may indicate fluctuations in the company's operational efficiency related to its fixed assets.
Moving on to the Total Asset Turnover ratio, this metric provides insights into how effectively Gentherm Inc is using all its assets to generate sales. The data shows an increasing trend in the Total Asset Turnover ratio over the years.
The ratio increased from 0.88 in 2020 to 1.12 in 2021, signifying that the company was able to generate more revenue relative to its total assets in 2021. This trend continued with values of 0.96, 1.17, and 1.16 in 2022, 2023, and 2024, respectively.
The rising Total Asset Turnover ratio indicates that Gentherm Inc has been more efficient in utilizing all its assets to generate sales over the years, which can be a positive indicator of the company's operational effectiveness and financial performance.