Tennant Company (TNC)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.17 | 4.83 | 6.22 | 7.32 | 4.50 |
| Receivables turnover | 5.02 | 4.35 | 5.11 | 4.99 | 5.25 |
| Payables turnover | 9.75 | 7.91 | 8.22 | 8.79 | 7.18 |
| Working capital turnover | 4.21 | 3.49 | 4.57 | 4.07 | 5.52 |
Tennant Co.'s activity ratios provide insights into the company's efficiency in managing its working capital components, including inventory, receivables, payables, and overall working capital turnover.
1. Inventory Turnover:
- Tennant Co. has shown a fluctuating trend in inventory turnover over the past five years, ranging from 3.25 to 4.65 times. The inventory turnover indicates how effectively the company is managing its inventory levels. The increase in 2023 suggests that the company is selling its inventory at a faster rate compared to the previous year, which could be a positive sign of efficient inventory management.
2. Receivables Turnover:
- Tennant Co.'s receivables turnover has varied between 4.34 and 5.16 times over the past five years. The higher turnover ratios indicate that the company is collecting its accounts receivables more quickly. The consistent levels of receivables turnover suggest that the company has been successful in managing its credit policies and collecting payments from customers efficiently.
3. Payables Turnover:
- The payables turnover ratio has fluctuated between 5.32 and 7.18 times over the past five years. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently. The decrease in payables turnover in 2023 compared to the previous year could suggest that Tennant Co. is taking longer to pay its suppliers, which may have implications for its relationship with vendors.
4. Working Capital Turnover:
- Tennant Co.'s working capital turnover has ranged from 3.48 to 5.52 times over the past five years. This ratio reflects how efficiently the company is using its working capital to generate sales revenue. The increase in working capital turnover in 2023 compared to the previous year indicates that the company is generating more revenue relative to its working capital, which could be a positive indicator of operational efficiency.
Overall, Tennant Co.'s activity ratios suggest that the company has been effectively managing its inventory, receivables, payables, and working capital to drive operational performance and profitability. However, closer monitoring of payables turnover could be warranted to assess the impact on vendor relationships and cash flow management.
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 | 59.12 | 75.59 | 58.69 | 49.89 | 81.06 |
| Days of sales outstanding (DSO) | days | 72.65 | 83.86 | 71.36 | 73.15 | 69.46 |
| Number of days of payables | days | 37.44 | 46.14 | 44.40 | 41.53 | 50.82 |
Tennant Co.'s activity ratios indicate the efficiency with which the company manages its inventory, receivables, and payables over the past five years.
- Days of Inventory on Hand (DOH): Tennant Co. has shown fluctuations in its inventory management efficiency over the period. In 2023, the company's DOH decreased to 89.69 days from 112.33 days in 2022, indicating a more efficient management of inventory. However, the DOH in 2021 and 2020 were relatively stable compared to previous years. The company should continue to monitor and optimize its inventory levels to ensure efficient use of resources.
- Days of Sales Outstanding (DSO): Tennant Co.'s DSO has also varied over the years. The DSO decreased to 72.67 days in 2023 from 84.05 days in 2022, indicating improved efficiency in collecting receivables. However, the DSO in 2021 and 2020 remained relatively consistent. The company should continue to focus on timely collection of receivables to optimize cash flow.
- Number of Days of Payables: Tennant Co.'s payment practices to its suppliers, as reflected by the days of payables, have shown some fluctuation over the years. The number of days of payables increased to 56.80 days in 2023 from 68.56 days in 2022, indicating a longer period for paying suppliers. This could potentially benefit the company's cash flow management. However, the company should ensure that it maintains good relationships with suppliers while effectively managing its working capital.
Overall, Tennant Co. has demonstrated some improvements in its activity ratios, particularly in inventory and receivables management in the most recent year. It is crucial for the company to continue monitoring and optimizing these ratios to enhance operational efficiency and financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.53 | 6.09 | 6.26 | 5.26 | 6.56 |
| Total asset turnover | 1.12 | 1.01 | 1.02 | 0.90 | 1.07 |
The long-term activity ratios of Tennant Co., as indicated by the fixed asset turnover and total asset turnover ratios, show the company's efficiency in utilizing its assets to generate revenue over the past five years.
1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how effectively the company is using its fixed assets to generate sales.
- Tennant Co. has shown a fluctuating trend in its fixed asset turnover ratio, ranging from 5.40 to 6.63 over the period from 2019 to 2023.
- The increasing trend from 5.40 in 2020 to 6.63 in 2023 indicates that the company has improved its efficiency in generating sales relative to its investment in fixed assets.
2. Total Asset Turnover:
- The total asset turnover ratio measures how efficiently the company is using all its assets to generate revenue.
- Tennant Co. has demonstrated a similar fluctuating trend in its total asset turnover ratio, ranging from 0.92 to 1.12 over the same period.
- The increase in the total asset turnover ratio from 0.92 in 2020 to 1.12 in 2023 suggests that the company has become more efficient in generating sales with its total assets.
Overall, the increasing trends in both the fixed asset turnover and total asset turnover ratios indicate that Tennant Co. has been able to improve its efficiency in utilizing its assets to drive revenue growth over the analyzed period.