Titan International Inc (TWI)

Short-term

Turnover ratios

Inventory turnover for Titan International, Inc. has shown a generally decreasing trend over the past five years, indicating that the company is selling its inventory less frequently compared to previous years. This could suggest potential issues with inventory management or slowing sales.

Receivables turnover has fluctuated over the years but has shown a slight increasing trend overall. This indicates that the company is collecting its accounts receivable at a faster rate in recent years, which is a positive sign of efficient credit management and collection practices.

Payables turnover has also varied over the years, but the trend shows a decreasing pattern. A decreasing payables turnover ratio could imply that the company is taking longer to pay its suppliers, which may have implications for supplier relationships and liquidity management.

Working capital turnover has fluctuated over the years, but the trend shows a general decrease. A declining working capital turnover ratio may indicate that the company is becoming less efficient in generating sales relative to the capital invested in its operations.

Overall, while the receivables turnover ratio demonstrates improving efficiency in collecting receivables, the decreasing trends in inventory turnover, payables turnover, and working capital turnover may raise concerns about operational efficiency and management of working capital for Titan International, Inc.

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Average number of days

Activity ratios provide insight into how effectively a company is managing its assets and operations. Let's analyze the activity ratios of Titan International, Inc. based on the data provided:

1. Days of Inventory on Hand (DOH):
- The average number of days it takes for Titan International to sell its inventory has fluctuated over the past five years, ranging from 80.16 days in 2022 to 94.84 days in 2020.
- In 2023, the DOH increased to 87.92 days from 80.16 days in 2022. This may indicate that Titan International was holding inventory for a longer period, which could tie up working capital and potentially indicate inefficiencies in inventory management.

2. Days of Sales Outstanding (DSO):
- The DSO metric represents the average number of days it takes for Titan International to collect payments from its customers after a sale.
- The trend shows fluctuations in DSO over the years, with a decrease from 56.10 days in 2020 to 44.15 days in 2023.
- A lower DSO is generally favorable as it indicates that the company is collecting payments more quickly, improving cash flow and liquidity.

3. Number of Days of Payables:
- The days of payables metric demonstrates how long Titan International takes to pay its suppliers for goods and services received.
- There is variability in the number of days of payables over the years, with a notable decrease from 65.80 days in 2021 to 48.44 days in 2023.
- A lower number of days of payables could suggest that Titan International is paying its suppliers more promptly, potentially improving relationships with suppliers but also reducing available cash on hand.

In summary, analyzing Titan International's activity ratios reveals potential areas of strength and weakness in the management of its inventory, accounts receivable, and accounts payable. The company may need to focus on optimizing inventory levels, accelerating collections from customers, and balancing payment terms with suppliers to enhance efficiency and financial performance.

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Long-term

The fixed asset turnover ratio for Titan International, Inc. has shown fluctuation over the past five years, ranging from a low of 3.87 in 2019 to a high of 7.31 in 2022. This ratio measures the company's ability to generate sales from its investment in fixed assets. A higher fixed asset turnover ratio indicates that the company is more efficient in utilizing its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio has also varied, with a low of 1.22 in 2020 and a high of 1.69 in 2022. This ratio reflects the company's ability to generate sales from its total assets, including both fixed and current assets. A higher total asset turnover ratio suggests that the company is efficient in using all its assets to generate sales.

Overall, the trend in both fixed asset turnover and total asset turnover ratios shows fluctuations, indicating changes in the company's asset utilization efficiency over the years. It is important for Titan International, Inc. to analyze the factors affecting these ratios and take appropriate actions to improve efficiency in utilizing its assets to drive sales and profitability.