Toro Co (TTC)

Short-term

Turnover ratios

Inventory turnover measures how efficiently a company manages its inventory by evaluating how many times it sells and replaces its inventory during a period. Toro Co.'s inventory turnover has been consistent over the past quarters, ranging between 2.45 and 3.13 times. A decreasing trend may indicate inefficient inventory management or overstocking.

Receivables turnover reflects how quickly a company collects cash from its credit sales. Toro Co.'s receivables turnover has varied significantly, with notable fluctuations from 9.01 to 13.57 times. A higher turnover indicates faster collection of receivables, suggesting efficient credit management.

Payables turnover assesses how rapidly a company pays off its suppliers. Toro Co.'s payables turnover has also fluctuated, ranging from 4.93 to 7.60 times. A higher turnover may suggest a shorter payment period to suppliers or better cash management but could also indicate strained supplier relationships.

Working capital turnover evaluates how efficiently a company utilizes its working capital to generate sales. Toro Co.'s working capital turnover has experienced fluctuations, with values between 4.22 and 7.45. A declining trend may suggest suboptimal utilization of working capital or potential liquidity issues.

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Average number of days

Toro Co.'s activity ratios indicate how efficiently the company manages its inventory, accounts receivable, and accounts payable.

1. Days of Inventory on Hand (DOH): The trend in DOH shows an increase from Q2 2022 to Q1 2024, peaking at 149.18 days. This indicates that Toro Co. took longer to sell its inventory, which may tie up working capital and increase holding costs.

2. Days of Sales Outstanding (DSO): The DSO decreased from Q2 2022 to Q4 2023, reflecting a shorter period for collecting payments from customers. However, there was a slight increase in Q1 2024, which could imply a delay in receivables collection.

3. Number of Days of Payables: Toro Co. extended its payment period from Q2 2022 to Q4 2022 before shortening it in Q1 2023. The number of days of payables fluctuated in subsequent quarters, with a decrease in Q4 2023 and an increase in Q1 2024. These changes suggest an adjustment in payment terms with suppliers.

Overall, the increasing trend in DOH alongside fluctuations in DSO and payables days is a cause for further analysis to understand how efficiently Toro Co. is managing its working capital and liquidity.

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Long-term

Toro Co.'s long-term activity ratios provide insights into how efficiently the company is utilizing its fixed assets and total assets to generate sales revenue.

Fixed asset turnover indicates that the company generated $6.89 of sales for every dollar invested in fixed assets in Q1 2024, which decreased slightly from the previous quarter. The trend of decreasing fixed asset turnover from Q1 2024 to Q2 2022 suggests a potential decrease in the efficiency of utilizing fixed assets to generate sales over time.

Total asset turnover measures how efficiently the company is using all its assets to generate sales. Toro Co. had a total asset turnover of 1.16 in Q1 2024, indicating that for every dollar in total assets, the company generated $1.16 in sales revenue. The total asset turnover has been fluctuating over the quarters but generally trending downwards from Q2 2022 to Q1 2024, which indicates a decline in the overall efficiency of asset utilization to generate sales.

In conclusion, Toro Co.'s long-term activity ratios suggest a potential decline in the efficiency of utilizing fixed assets and total assets to generate sales revenue over the quarters, which may necessitate further analysis and strategic actions to improve operational efficiency and asset utilization.