Universal Corporation (UVV)

Short-term

Turnover ratios

The activity ratios of Universal Corporation provide insights into how efficiently the company manages its assets and liabilities.

1. Inventory Turnover: Universal Corporation's inventory turnover has shown a fluctuating trend over the past five years, ranging from 10.11 to 17.98 times. The higher inventory turnover indicates that the company is selling its inventory quickly, which is positive as excess inventory ties up capital and increases storage costs. However, the decreasing trend from 2020 to 2022 may suggest potential inefficiencies in managing inventory levels.

2. Receivables Turnover: The receivables turnover ratio represents how efficiently Universal Corporation collects its accounts receivable. The fluctuating but generally stable trend in this ratio indicates that the company has been effectively managing its accounts receivable turnover over the years. A higher turnover indicates faster collection of receivables, leading to improved cash flow.

3. Payables Turnover: The payables turnover ratio measures how quickly a company pays its suppliers. Universal Corporation's payables turnover has significantly increased over the years, reflecting a drastic change from 2019 to 2021. The exceptionally high 2024 value of 1,574.29 suggests that the company is paying its suppliers at a much quicker pace compared to previous years. However, such a high payables turnover may also indicate potential challenges in managing vendor relationships or liquidity constraints.

4. Working Capital Turnover: The working capital turnover ratio reflects how efficiently Universal Corporation is utilizing its working capital to generate sales. The steady increase in this ratio from 2020 to 2024 indicates an improvement in the company's ability to utilize its working capital effectively to generate revenue.

In summary, while Universal Corporation shows efficiency in managing its inventory and receivables turnover, the significant increase in payables turnover and improvement in working capital turnover suggest the company's evolving strategies and tactics in managing its resources and operations.

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Average number of days

The activity ratios provide insights into how efficiently Universal Corporation is managing its inventory, accounts receivable, and accounts payable.

1. Days of Inventory on Hand (DOH): This ratio decreased from 30.71 days in 2023 to 27.68 days in 2024, indicating that Universal Corporation is managing its inventory more efficiently. A lower DOH implies quicker turnover of inventory, which can lead to lower holding costs and potentially higher profitability.

2. Days of Sales Outstanding (DSO): The DSO ratio increased from 29.03 days in 2023 to 35.63 days in 2024. This implies that Universal Corporation is taking longer to collect payments from its customers. A higher DSO may indicate potential issues with credit policies or collection processes.

3. Number of Days of Payables: Universal Corporation reduced its payables days significantly from 0.88 days in 2023 to 0.23 days in 2024. A lower number of days of payables indicates that the company is paying its suppliers more quickly. This may reflect a strategy to maintain good relationships with suppliers or take advantage of early payment discounts.

Overall, Universal Corporation's activity ratios suggest improvements in inventory management efficiency but a slight deterioration in accounts receivable collection. The sharp reduction in payables days indicates a proactive approach to managing payment terms with suppliers. Monitoring and optimizing these activity ratios can help the company enhance working capital management and overall operational efficiency.

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Long-term

Universal Corporation's long-term activity ratios indicate how efficiently the company utilizes its assets to generate revenue. The fixed asset turnover ratio has been steadily increasing over the past five years, reaching a high of 14.71 in Mar 31, 2024. This suggests that Universal Corporation has been more effective in generating revenue from its investments in fixed assets.

The total asset turnover ratio, on the other hand, has fluctuated over the same period, with a peak of 1.92 in Mar 31, 2023. Although there has been some variability, the ratio has generally remained relatively stable, indicating that the company is efficiently utilizing both its fixed and current assets to generate revenue.

Overall, Universal Corporation's long-term activity ratios suggest that the company is effectively managing its assets to drive revenue growth. The increasing trend in fixed asset turnover and the consistent performance in total asset turnover indicate a positive outlook for the company's operational efficiency and asset utilization.