Tennant Company (TNC)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 6.17 | 5.78 | 5.24 | 5.02 | 4.83 | 5.05 | 5.39 | 5.50 | 6.21 | 6.27 | 6.12 | 4.83 | 5.48 | 4.56 | 4.11 | 4.32 | 4.50 | 4.18 | 4.22 | 4.23 |
| Receivables turnover | 5.02 | 5.07 | 4.50 | 4.49 | 4.35 | 4.90 | 5.02 | 5.37 | 5.11 | 5.31 | 5.03 | 5.22 | 4.99 | 5.17 | 5.78 | 5.53 | 5.25 | 5.51 | 5.05 | 5.45 |
| Payables turnover | 9.75 | 10.83 | 9.20 | 8.69 | 7.91 | 9.17 | 8.44 | 8.45 | 8.21 | 8.46 | 7.65 | 7.40 | 6.59 | 7.07 | 7.97 | 7.01 | 7.18 | 7.17 | 6.82 | 7.05 |
| Working capital turnover | 4.21 | 3.96 | 3.57 | 3.51 | 3.49 | 3.87 | 4.23 | 4.14 | 4.57 | 4.21 | 4.38 | 3.92 | 4.07 | 4.14 | 4.97 | 3.13 | 5.52 | 5.38 | 5.10 | 6.01 |
Activity ratios measure how well a company is utilizing its assets to generate sales and cash flow.
1. Inventory turnover: Tennant Co.'s inventory turnover has been relatively stable over the past eight quarters, ranging from 3.25 to 4.07. This ratio indicates how efficiently the company is managing its inventory levels and converting them into sales. A higher turnover ratio suggests efficient inventory management, which can help reduce carrying costs and minimize the risk of obsolete inventory.
2. Receivables turnover: The receivables turnover ratio measures how quickly a company collects its accounts receivable. Tennant Co.'s ratio has varied between 4.34 and 5.44 over the past two years. A higher turnover ratio suggests effective credit and collection policies, allowing the company to convert sales into cash quickly.
3. Payables turnover: Tennant Co.'s payables turnover ratio has fluctuated between 5.32 and 7.22 over the same period. This ratio reflects how efficiently the company is managing its accounts payable. A higher turnover ratio indicates that the company is paying its suppliers promptly, which can help maintain good relationships and may provide opportunities for discounts.
4. Working capital turnover: The working capital turnover ratio shows how efficiently a company is using its working capital to generate sales. Tennant Co.'s ratio has ranged from 3.48 to 4.24 over the past eight quarters. A higher turnover ratio indicates that the company is effectively utilizing its assets to support its operations and drive revenue growth.
In summary, Tennant Co. shows relatively stable activity ratios over the past two years. The company's inventory, receivables, payables, and working capital turnover ratios indicate efficient asset utilization and management practices, which are essential for maintaining a healthy cash flow and profitability in the long term.
Average number of days
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 59.11 | 63.19 | 69.68 | 72.69 | 75.60 | 72.23 | 67.77 | 66.37 | 58.74 | 58.20 | 59.67 | 75.57 | 66.58 | 80.10 | 88.72 | 84.41 | 81.03 | 87.28 | 86.50 | 86.30 |
| Days of sales outstanding (DSO) | days | 72.65 | 71.98 | 81.15 | 81.31 | 83.89 | 74.44 | 72.64 | 68.02 | 71.37 | 68.76 | 72.61 | 69.95 | 73.15 | 70.66 | 63.18 | 65.99 | 69.46 | 66.30 | 72.34 | 66.95 |
| Number of days of payables | days | 37.44 | 33.72 | 39.69 | 41.99 | 46.14 | 39.81 | 43.26 | 43.19 | 44.44 | 43.16 | 47.71 | 49.31 | 55.42 | 51.60 | 45.81 | 52.10 | 50.80 | 50.93 | 53.53 | 51.77 |
Analyzing Tennant Co.'s activity ratios over the past eight quarters, we can see trends in their inventory, accounts receivable, and accounts payable management.
Days of inventory on hand (DOH) shows the average number of days it takes for inventory to be sold or used. Tennant Co.'s inventory turnover has been gradually decreasing from Q1 2022 to Q4 2023, indicating a longer holding period for inventory. This could potentially signal inefficiencies in inventory management, leading to higher carrying costs and possible obsolescence risks.
Days of sales outstanding (DSO) reflects the average number of days it takes for the company to collect its accounts receivable. Tennant Co. has shown some fluctuation in DSO over the quarters, but overall there has been a slight increase from Q1 2022 to Q4 2023. This indicates a longer collection period, potentially impacting the company's cash flow and liquidity if not managed effectively.
Number of days of payables represents the average number of days it takes for the company to pay its suppliers. Tennant Co. has been extending its payment period from Q1 2022 to Q4 2023, suggesting a stretching of trade credit terms. While this may provide short-term financing benefits, it could strain relationships with suppliers in the long run if not balanced properly.
Overall, Tennant Co. should closely monitor its activity ratios and consider implementing strategies to optimize inventory levels, expedite collections, and improve payables management for enhanced operational efficiency and working capital management.
Long-term
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed asset turnover | 2.53 | 6.74 | 6.42 | 6.24 | 6.08 | 6.47 | 6.40 | 6.25 | 6.26 | 6.21 | 6.06 | 5.80 | 5.26 | 5.74 | 5.83 | 6.48 | 6.56 | 6.73 | 6.47 | 6.36 |
| Total asset turnover | 1.12 | 1.16 | 1.07 | 1.04 | 1.01 | 1.07 | 1.06 | 1.02 | 1.02 | 0.99 | 0.97 | 0.92 | 0.90 | 0.96 | 1.01 | 0.98 | 1.07 | 1.08 | 1.05 | 1.07 |
The fixed asset turnover ratio, which measures how efficiently a company generates sales from its fixed assets, has remained relatively stable for Tennant Co. over the past eight quarters, ranging between 6.07 and 6.72. This indicates that the company is effectively using its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio, reflecting the company's ability to generate sales from its total assets, has also shown consistency, fluctuating between 1.01 and 1.15 during the same period. This suggests that Tennant Co. is efficiently utilizing its total assets to generate revenue, with a slight improvement in recent quarters.
Both ratios are important indicators of a company's operational efficiency and asset utilization. The relatively high fixed asset turnover and stable total asset turnover of Tennant Co. reflect positively on its operational performance and ability to generate revenue from its assets.