Tennant Company (TNC)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.01 | 4.07 | 3.25 | 4.06 | 4.65 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | — | 4.21 | 3.48 | 4.61 | 4.18 |
Tennant Company's inventory turnover has shown some fluctuations over the years. In 2020, the inventory turnover was 4.65 times, which decreased to 4.06 times in 2021, further dropping to 3.25 times in 2022. However, there was a slight improvement in 2023 with an inventory turnover of 4.07 times, followed by a similar level of 4.01 times in 2024. The declining trend from 2020 to 2022 may indicate potential issues with managing and selling inventory efficiently, whereas the improvement in 2023 and 2024 suggests better inventory management.
On the other hand, the receivables turnover, payables turnover, and working capital turnover ratios were not provided for any of the years, making it difficult to assess the efficiency of Tennant Company in collecting receivables, managing payables, and utilizing working capital. Receivables turnover would have indicated how quickly the company collects money owed by customers, payables turnover would have shown how efficiently the company pays its suppliers, and working capital turnover would have reflected how effectively the company utilizes its working capital to generate sales.
Overall, without the complete data for these ratios, a comprehensive analysis of Tennant Company's activity ratios is limited. It is recommended that these missing ratios be calculated and monitored to gain a more thorough understanding of the company's operational efficiency and financial health.
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 | 91.06 | 89.69 | 112.33 | 89.80 | 78.57 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
The analysis of Tennant Company's activity ratios reveals the following trends:
1. Days of Inventory on Hand (DOH):
- Tennant Company's DOH has shown a fluctuating trend over the years, ranging from 78.57 days in 2020 to 112.33 days in 2022.
- A higher number of days of inventory on hand indicates that Tennant Company is holding onto its inventory for a longer period, which may tie up capital and increase carrying costs.
- The decrease in DOH from 112.33 days in 2022 to 89.69 days in 2023 suggests an improvement in inventory management efficiency.
- Overall, Tennant Company should focus on optimizing its inventory levels to strike a balance between meeting customer demand and avoiding excess holding costs.
2. Days of Sales Outstanding (DSO):
- The data for DSO is not provided, indicating that the number of days it takes for Tennant Company to collect its accounts receivable was not available for the years covered.
- DSO is a critical metric in assessing how quickly a company is able to convert its accounts receivable into cash.
- Without the DSO data, it is challenging to evaluate Tennant Company's effectiveness in managing its accounts receivable and cash flow generation from sales.
3. Number of Days of Payables:
- Similarly, the data for the number of days of payables is not provided, indicating the company's payment terms with suppliers were not available for analysis.
- The number of days of payables is crucial in understanding how long Tennant Company takes to settle its outstanding payables to suppliers.
- Without this data, it is challenging to assess Tennant Company's working capital management and relationships with its suppliers.
In conclusion, while the analysis of Tennant Company's DOH provides insights into its inventory management efficiency, the lack of DSO and payables data limits a comprehensive evaluation of its overall activity ratios and working capital management effectiveness. It would be beneficial for Tennant Company to provide additional data on DSO and payables to facilitate a more thorough analysis of its operational performance and cash flow dynamics.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 5.16 | 5.09 | 5.40 |
| Total asset turnover | 1.08 | 1.12 | 1.01 | 1.03 | 0.92 |
The fixed asset turnover ratio for Tennant Company over the last five years shows a consistent level of efficiency in utilizing its fixed assets to generate sales. The ratio has ranged from 5.09 to 5.40, indicating that the company generates a significant amount of revenue relative to its investment in fixed assets.
In terms of total asset turnover, the company's efficiency in utilizing all its assets to generate sales has shown improvement over the period. The ratio has increased steadily from 0.92 in 2020 to 1.08 in 2024, peaking at 1.12 in 2023. This indicates that Tennant Company has become more effective in generating revenue from its total asset base over the years.
Overall, Tennant Company's long-term activity ratios suggest that the company has been effectively managing its assets to generate sales, with a consistent high level of efficiency in utilizing fixed assets and a trend of improving efficiency in utilizing total assets.