Gentherm Inc (THRM)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.47 | 5.11 | 5.61 | 6.51 | 7.44 |
| Receivables turnover | 5.71 | 4.72 | 5.33 | 3.91 | 5.71 |
| Payables turnover | 6.17 | 6.12 | 7.29 | 6.87 | 10.62 |
| Working capital turnover | 3.99 | 3.00 | 2.96 | 2.06 | 4.46 |
Activity ratios provide insights into how efficiently a company manages its assets and liabilities to generate sales and cash flow. Let's analyze Gentherm Inc's activity ratios:
1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory during a specific period.
- Gentherm's inventory turnover has been fluctuating but generally decreasing slightly from 2019 to 2023. This trend indicates that the company is holding onto its inventory slightly longer in recent years.
2. Receivables Turnover:
- The receivables turnover ratio indicates how efficiently a company collects cash from its credit sales.
- Gentherm's receivables turnover has fluctuated over the years, with a significant increase in 2020 followed by slight fluctuations. This could suggest variations in the company's credit policies or customer payment behaviors.
3. Payables Turnover:
- The payables turnover ratio measures how quickly a company pays its suppliers.
- Gentherm's payables turnover has been relatively stable from 2019 to 2023. A higher turnover ratio indicates that the company is paying its suppliers more frequently.
4. Working Capital Turnover:
- The working capital turnover ratio indicates how effectively a company utilizes its working capital to generate sales.
- Gentherm's working capital turnover has been increasing over the years, indicating improved efficiency in utilizing its working capital to generate sales.
Overall, the analysis of Gentherm Inc's activity ratios suggests fluctuations in inventory management, collections from credit sales, and payment to suppliers. The increasing trend in working capital turnover reflects better utilization of working capital to drive sales. Additional analysis and context are needed to understand the specific factors driving these trends and their implications for the company's overall financial performance and operational efficiency.
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 | 56.44 | 71.44 | 65.06 | 56.06 | 49.03 |
| Days of sales outstanding (DSO) | days | 63.94 | 77.30 | 68.53 | 93.36 | 63.92 |
| Number of days of payables | days | 59.16 | 59.65 | 50.07 | 53.15 | 34.36 |
The activity ratios of Gentherm Inc indicate the efficiency of the company in managing its operations and cash flow related to inventory, accounts receivable, and accounts payable.
1. Days of Inventory on Hand (DOH): The trend in DOH has shown some fluctuations over the years. In 2023, Gentherm held inventory for approximately 67.25 days before selling it, which is an improvement compared to the previous year. This suggests that the company has managed its inventory more efficiently in the most recent year, possibly by optimizing its production and supply chain processes.
2. Days of Sales Outstanding (DSO): The DSO ratio reflects how long it takes for Gentherm to collect payment from its customers after making a sale. In 2023, the company took approximately 72.61 days to collect outstanding payments, which is slightly higher compared to the previous year. This could indicate that Gentherm may have experienced challenges in collecting payments promptly from customers in the most recent year.
3. Number of Days of Payables: The days of payables ratio signifies how long it takes for Gentherm to pay its suppliers for goods and services purchased on credit. The trend in this ratio has been fluctuating, with the number of days of payables increasing in 2023 to 70.50 days. This indicates that Gentherm took longer to settle its payables in 2023 compared to the previous year, potentially impacting the company's relationships with suppliers.
Overall, the analysis of Gentherm Inc's activity ratios highlights the company's performance in managing its inventory, accounts receivable, and accounts payable. Monitoring these ratios can provide insights into the company's operational efficiency, cash flow management, and relationships with customers and suppliers.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.90 | 4.88 | 6.72 | 5.92 | 6.03 |
| Total asset turnover | 1.17 | 0.96 | 1.12 | 0.88 | 1.31 |
The fixed asset turnover ratio measures the efficiency of Gentherm Inc in generating sales revenue from its investment in fixed assets. An increasing trend in the fixed asset turnover ratio indicates that the company is utilizing its fixed assets more effectively over time. Gentherm Inc's fixed asset turnover has shown some fluctuation, with the ratio peaking in 2021 at 6.74 and slightly decreasing in 2023 to 5.99. This implies that for every dollar invested in fixed assets, the company generated $5.99 in sales in 2023.
On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from all its assets, including both fixed and current assets. A higher total asset turnover ratio suggests that Gentherm Inc is efficiently utilizing its total assets to generate revenue. Over the five years presented, the total asset turnover ratio has shown some variability, with a notable decrease in 2020 and a subsequent increase in 2021. In 2023, the total asset turnover ratio stood at 1.19, indicating that for every dollar of total assets, the company generated $1.19 in sales revenue.
Overall, Gentherm Inc has demonstrated varying efficiency levels in asset utilization over the years, with both the fixed asset turnover and total asset turnover ratios displaying fluctuations. Further analysis would be beneficial to understand the reasons behind these fluctuations and to assess the company's overall operational efficiency in utilizing its assets for revenue generation.