Interface Inc (TILE)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.18 | 4.01 | 4.17 | 5.05 | 4.81 |
| Receivables turnover | 7.50 | 6.91 | 6.82 | 7.68 | 7.42 |
| Payables turnover | 18.56 | 15.71 | 12.86 | 19.67 | 16.10 |
| Working capital turnover | 3.32 | 3.19 | 3.77 | 3.56 | 4.62 |
Interface Inc.'s activity ratios provide insights into the efficiency of the company's operating cycle and management of working capital.
1. Inventory turnover:
Interface's inventory turnover has been relatively stable over the past five years, ranging from 2.81 to 3.22 times. This indicates that the company is able to sell and replenish its inventory at a moderate pace. A higher turnover could suggest effective inventory management, but this also depends on the industry norms and business model.
2. Receivables turnover:
The receivables turnover ratio has shown a gradual improvement over the years, from 6.99 to 7.72. This implies that Interface has been able to collect its accounts receivable more efficiently. A higher turnover ratio indicates faster collection of outstanding debts, which is a positive sign for cash flow management.
3. Payables turnover:
Interface's payables turnover has fluctuated but generally increased over the past five years, reaching 13.04. A higher payables turnover ratio suggests that the company is taking longer to pay its suppliers, which can be advantageous for cash flow management. However, it is important to ensure that such practices do not strain relationships with suppliers.
4. Working capital turnover:
The working capital turnover ratio has shown some variability but has generally decreased from 4.71 to 3.42. A lower ratio could indicate that Interface is becoming less efficient in generating sales from its working capital. This may warrant a closer look at the company's cash conversion cycle and overall working capital management practices.
Overall, Interface Inc. appears to have maintained relatively stable activity ratios over the years, with improvements in receivables turnover and payables turnover. However, monitoring these ratios in conjunction with other financial metrics can provide a more holistic view of the company's operational efficiency and financial health.
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 | 87.24 | 90.92 | 87.59 | 72.33 | 75.93 |
| Days of sales outstanding (DSO) | days | 48.65 | 52.80 | 53.52 | 47.53 | 49.17 |
| Number of days of payables | days | 19.67 | 23.23 | 28.39 | 18.56 | 22.66 |
Interface Inc.'s activity ratios indicate the efficiency of its inventory management, accounts receivable collection, and accounts payable turnover over the past five years.
The Days of Inventory on Hand (DOH) has fluctuated between 113.21 days in 2019 to 129.98 days in 2023. This ratio suggests that the company has taken longer time spans to sell its inventory in some years compared to others. The increase in days may suggest issues with inventory turnover or overstocking, potentially tying up cash flow.
The Days of Sales Outstanding (DSO) measure the average number of days it takes for the company to collect revenue after a sale. Interface Inc. has varied DSO values ranging from 46.27 days in 2021 to 52.20 days in 2022, which indicates how efficient the company is in collecting receivables. Lower DSO values are generally preferred as they indicate that the company is collecting payments more quickly.
The Number of Days of Payables ratio, representing how long it takes for Interface Inc. to pay its suppliers, ranged from 27.99 days in 2023 to 40.85 days in 2022. Longer payment periods could indicate favorable terms with vendors, but also the risk of strained supplier relationships or missed discounts due to delayed payments.
In conclusion, Interface Inc. should focus on optimizing its inventory turnover, improving accounts receivable collection efficiency, and managing its payables effectively to enhance its overall operational performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.32 | 4.33 | 3.62 | 3.04 | 4.06 |
| Total asset turnover | 1.00 | 1.00 | 0.88 | 0.82 | 0.93 |
Interface Inc.'s long-term activity ratios reflect the efficiency with which the company utilizes its assets to generate sales. The fixed asset turnover ratio has shown a fluctuating trend over the past five years, ranging from 3.07 to 4.36, with a notable increase in 2023 compared to the previous year. This suggests that the company has been able to generate more sales relative to its fixed assets in the most recent year.
On the other hand, the total asset turnover ratio has also exhibited an increasing trend from 0.84 in 2021 to 1.03 in 2023. This indicates that Interface Inc. has been more effective in utilizing all of its assets, not just fixed assets, to generate sales over the years.
Overall, the company's long-term activity ratios demonstrate an improvement in asset utilization efficiency, with both fixed asset turnover and total asset turnover ratios showing positive trends. This indicates that Interface Inc. has been able to generate more sales per dollar invested in assets, which is a positive indicator of operational efficiency and effective asset management.