UFP Technologies Inc (UFPT)

Short-term

Turnover ratios

UFP Technologies Inc's activity ratios provide insights into how efficiently the company manages its resources.

1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory during a specific period. UFP Technologies Inc's inventory turnover has fluctuated over the years, from 9.08 in 2020 to 6.45 in 2024. A higher inventory turnover indicates that the company is selling its products quickly, while a lower turnover may suggest overstocking or slow sales.

2. Receivables Turnover:
- The receivables turnover ratio indicates how effectively a company collects payment from its customers. UFP Technologies Inc's receivables turnover ranged from 5.24 in 2021 to 6.80 in 2022. A higher turnover ratio implies efficient collection of payments, whereas a lower ratio may indicate credit issues or difficulty in receiving payments.

3. Payables Turnover:
- The payables turnover ratio reflects how quickly a company pays its suppliers. UFP Technologies Inc's payables turnover declined from 41.05 in 2020 to 23.26 in 2024. A higher payables turnover suggests that the company is efficient in managing its payables, while a lower ratio may signal delayed payments or strained supplier relationships.

4. Working Capital Turnover:
- The working capital turnover ratio indicates how efficiently a company utilizes its working capital to generate sales. UFP Technologies Inc's working capital turnover increased from 3.15 in 2020 to 6.21 in 2022 before declining slightly to 4.26 in 2024. A higher ratio indicates better utilization of working capital to drive sales, while a lower ratio may imply inefficiencies in capital deployment.

Overall, analyzing these activity ratios can help stakeholders assess UFP Technologies Inc's operational efficiency, inventory management, customer credit policies, payment practices, and working capital utilization over the years.

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Average number of days

Based on the activity ratios provided for UFP Technologies Inc, let's analyze the trends:

1. Days of Inventory on Hand (DOH):
- The DOH represents the number of days the company holds inventory before it is sold. UFP Technologies Inc's DOH has shown fluctuations over the years, ranging from 40.22 days in 2020 to 74.10 days in 2023. A decreasing trend is observed from 2020 to 2024, indicating the company has become more efficient in managing its inventory.

2. Days of Sales Outstanding (DSO):
- DSO measures how many days it takes for the company to collect its accounts receivable. UFP Technologies Inc's DSO ranged from 53.94 days in 2020 to 61.12 days in 2024. The DSO increased from 2020 to 2021, but then decreased in subsequent years, suggesting the company's collection efforts have improved.

3. Number of Days of Payables:
- This ratio represents the number of days the company takes to pay its suppliers. UFP Technologies Inc's payables period increased from 8.89 days in 2020 to 23.53 days in 2023 before decreasing slightly to 15.69 days in 2024. This indicates that the company has been taking longer to settle its payables, which could have cash flow implications.

In summary, UFP Technologies Inc has shown improvements in managing its inventory and collections over the years, but there has been an increase in the number of days it takes to pay its suppliers. Monitoring and managing these activity ratios effectively can help optimize working capital management and overall operational efficiency.

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Long-term

The analysis of UFP Technologies Inc's long-term activity ratios reveals interesting insights into the efficiency of the company's asset management over the years:

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how efficiently the company is generating revenue from its investments in fixed assets.
- From 2020 to 2024, UFP Technologies Inc's fixed asset turnover ratio has been steadily increasing, indicating a more efficient utilization of its fixed assets to generate sales.
- The ratio increased from 3.33 in 2020 to 7.17 in 2024, showing a significant improvement in the company's ability to generate sales from its investment in fixed assets.
- This upward trend suggests that the company has been improving its operational efficiency and productivity in utilizing its fixed assets over the years.

2. Total Asset Turnover:
- The total asset turnover ratio measures how efficiently the company is generating revenue from all its assets.
- UFP Technologies Inc's total asset turnover ratio fluctuated over the years, with a decrease from 0.88 in 2020 to 0.62 in 2021, followed by an increase to 0.80 in 2024.
- The fluctuation in this ratio indicates that the company's ability to generate sales from all its assets experienced some variability during this period.
- Overall, the total asset turnover ratio suggests that UFP Technologies Inc may have faced challenges in optimizing the utilization of all its assets to generate revenue consistently.

In conclusion, while UFP Technologies Inc has shown significant improvement in its efficiency in utilizing fixed assets to generate sales, there have been fluctuations in its overall asset turnover. The company may need to focus on enhancing the efficiency of utilizing all its assets to ensure consistent revenue generation in the future.