Toll Brothers Inc (TOL)
Activity ratios
Short-term
Turnover ratios
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.92 | 1.00 | 0.98 | 0.85 | 0.83 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 8.37 | 9.98 | 5.90 | 5.83 | 6.44 |
The inventory turnover ratio for Toll Brothers Inc. has shown a fluctuating trend over the past five years, with a value of 0.81 in 2023, down from 0.89 in 2022. This indicates that the company's inventory is being sold and replaced at a slower rate compared to the previous year.
On the other hand, the receivables turnover ratio has been steadily increasing, reaching 40.54 in 2023 from 35.74 in 2022. This suggests that Toll Brothers has been able to collect on its receivables more frequently, indicating an efficient management of its accounts receivable.
The payables turnover ratio has shown a slight decline, standing at 12.32 in 2023 compared to 12.58 in 2022. This implies that the company is taking longer to pay off its payables compared to the previous year, which could have an impact on its cash flow and supplier relationships.
In terms of working capital turnover, the ratio has increased to 1.47 in 2023 from 1.59 in 2022. This indicates that Toll Brothers has been able to generate more sales revenue for every dollar of working capital, reflecting improved efficiency in its use of working capital to generate sales.
Overall, while Toll Brothers has seen positive trends in its receivables turnover and working capital turnover, it should carefully monitor its inventory and payables turnover to ensure efficient management of its assets and liabilities.
Average number of days
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 396.42 | 363.32 | 371.88 | 428.27 | 439.19 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Toll Brothers Inc.'s activity ratios provide insight into the company's efficiency in managing its inventory, collecting receivables, and paying its bills. The days of inventory on hand (DOH) measure how many days it takes for the company to sell its inventory. An increasing trend in DOH, as seen from 2020 to 2023, indicates a longer time to sell inventory, which may tie up capital and increase carrying costs.
The days of sales outstanding (DSO) represent the average number of days it takes for the company to collect payment after a sale. Toll Brothers Inc. has shown an improving trend in DSO from 2019 to 2023, indicating a more efficient collection of receivables, which can improve cash flow and reduce the risk of bad debts.
The number of days of payables reflects how long the company takes to pay its suppliers. Toll Brothers Inc. has maintained relatively consistent days of payables over the years, suggesting a stable payment policy. However, a decreasing trend from 2019 to 2023 indicates that the company is paying its bills more quickly, potentially impacting cash flow or supplier relationships.
Overall, the trends in these activity ratios suggest that Toll Brothers Inc. has been working to improve its efficiency in managing inventory and collecting receivables, but may be tightening its payment terms with suppliers. This analysis provides valuable insights into the company's operational effectiveness and financial management.
Long-term
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 30.85 | 35.70 | 28.20 | 22.42 | 26.55 |
| Total asset turnover | 0.80 | 0.84 | 0.76 | 0.64 | 0.67 |
The long-term activity ratios of Toll Brothers Inc. have shown some fluctuations over the past five years. The fixed asset turnover, which measures the efficiency of the company's use of fixed assets to generate sales, has ranged from 22.39 to 35.70 over this period. In particular, there was a significant increase from 2020 to 2022, followed by a slight decrease in 2023.
Meanwhile, the total asset turnover, which indicates how effectively the company utilizes all its assets to generate revenue, has fluctuated between 0.64 and 0.84. This ratio reflects the company's ability to generate sales relative to its total assets. It is noteworthy that there was an overall increasing trend from 2019 to 2022, followed by a slight decrease in 2023.
Overall, while the fixed asset turnover has displayed more volatility, both ratios suggest variations in the company's ability to efficiently utilize its assets to generate sales over the past five years. These fluctuations could be indicative of changes in the company's operating efficiency and asset utilization strategies.