Valmont Industries Inc (VMI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.13 | 4.42 | 4.50 | 6.01 | 6.13 |
| Receivables turnover | 6.26 | 7.19 | 6.05 | 5.58 | 5.69 |
| Payables turnover | 11.27 | 8.93 | 9.43 | 10.06 | 12.95 |
| Working capital turnover | 3.87 | 4.45 | 3.65 | 3.24 | 2.97 |
Valmont Industries Inc's activity ratios provide insight into how efficiently the company is managing its assets and working capital.
1. Inventory Turnover:
- Valmont Industries Inc's inventory turnover has been fluctuating over the years, ranging from 4.42 to 6.13.
- The increasing trend in inventory turnover from 2020 to 2023 indicates that the company is selling its inventory at a faster rate.
- A higher inventory turnover ratio suggests efficient inventory management and effective sales strategies.
2. Receivables Turnover:
- Receivables turnover for Valmont Industries Inc has varied between 5.58 and 7.19 over the past five years.
- The higher receivables turnover in 2022 and 2023 indicates that the company is collecting its receivables more quickly.
- A higher receivables turnover ratio signifies effective credit and collection policies, leading to faster cash inflows.
3. Payables Turnover:
- Valmont Industries Inc's payables turnover has fluctuated between 8.93 and 12.95 in the last five years.
- The increasing trend in payables turnover suggests that the company is managing its payables more efficiently.
- A higher payables turnover ratio indicates that the company is taking longer to pay its suppliers, potentially improving cash flow management.
4. Working Capital Turnover:
- The working capital turnover for Valmont Industries Inc has ranged from 2.97 to 4.45 over the past five years.
- The increasing trend in working capital turnover indicates that the company is generating more sales revenue relative to its working capital.
- A higher working capital turnover ratio suggests that the company is utilizing its working capital efficiently to generate sales.
Overall, the analysis of Valmont Industries Inc's activity ratios shows improvements in inventory turnover, receivables turnover, payables turnover, and working capital turnover over the years, reflecting efficient management of assets and working capital.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 59.50 | 82.63 | 81.09 | 60.77 | 59.57 |
| Days of sales outstanding (DSO) | days | 58.34 | 50.75 | 60.30 | 65.44 | 64.12 |
| Number of days of payables | days | 32.38 | 40.86 | 38.70 | 36.29 | 28.19 |
Valmont Industries Inc's activity ratios provide insights into the efficiency of the company's operations.
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows a fluctuation over the past five years.
- In 2023, the DOH decreased significantly to 59.50 days from 82.63 days in 2022, indicating a more efficient management of inventory.
- However, the company maintained a relatively high level of inventory in 2021 and 2022 compared to previous years.
- The 2020 and 2019 levels were more in line with each other, suggesting some stability in inventory management during those years.
2. Days of Sales Outstanding (DSO):
- DSO measures how long it takes for the company to collect revenue from sales.
- The increase in DSO from 2022 to 2023 (50.75 days to 58.34 days) indicates a slower collection period, which could impact cash flow.
- The decreasing trend in DSO from 2019 to 2021 shows improved efficiency in collecting sales revenue.
- However, the increase in 2022 and 2023 may suggest a need to focus on faster collections to improve cash flow management.
3. Number of Days of Payables:
- The trend in the number of days of payables has been increasing over the past five years.
- A higher number of days of payables can indicate the company taking longer to pay its suppliers, which may strain supplier relationships.
- The increase from 2019 to 2023 suggests a lengthening of the payment period, which can have implications for cash flow management.
- Valmont Industries Inc may need to assess its payables process to ensure timely payments while maintaining good supplier relationships.
Overall, analyzing these activity ratios can help identify areas where Valmont Industries Inc may need to focus on improving efficiency in inventory management, sales collection, and payables management to enhance overall operational effectiveness and cash flow.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.67 | 7.30 | 5.78 | 4.78 | 4.90 |
| Total asset turnover | 1.18 | 1.22 | 1.00 | 0.97 | 0.97 |
Valmont Industries Inc's long-term activity ratios reflect its efficiency in generating sales relative to its fixed assets and total assets. The fixed asset turnover ratio has shown a fluctuating trend over the past five years, ranging from 4.78 in 2020 to a high of 7.30 in 2022. This indicates that the company has been able to generate sales more efficiently from its fixed assets over the years, with a notable improvement in 2022. A higher fixed asset turnover ratio signifies that Valmont is effectively utilizing its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio has been relatively stable, hovering around 1.00 over the years, except for a slight increase to 1.22 in 2022. This suggests that for each dollar of total assets, Valmont has consistently generated revenue between 0.97 to 1.22. A total asset turnover ratio greater than 1 indicates that the company is efficient in utilizing its assets to generate sales.
In conclusion, Valmont Industries Inc has demonstrated efficiency in utilizing both its fixed assets and total assets to generate sales over the years, with significant improvements in fixed asset turnover in 2022. Maintaining or improving these ratios can help the company sustain its operational efficiency and profitability in the long run.