Vontier Corp (VNT)

Short-term

Turnover ratios

Vontier Corp's activity ratios provide insights into the efficiency of the company's operations related to inventory management, accounts receivable collection, accounts payable settlement, and overall working capital utilization.

1. Inventory Turnover:
- Vontier Corp's inventory turnover has been gradually decreasing over the years, going from 8.96 in 2020 to 2.28 in 2024. This indicates that the company is selling its inventory at a slower rate. A declining inventory turnover may suggest potential issues such as overstocking, slow-moving inventory, or changes in consumer demand.

2. Receivables Turnover:
- The receivables turnover of Vontier Corp remained relatively stable over the years, ranging from 4.71 to 5.12. This indicates that the company is effective in collecting payments from customers. A consistent receivables turnover suggests efficient credit and collection policies in place.

3. Payables Turnover:
- The payables turnover for Vontier Corp decreased significantly from 5.70 in 2020 to 2.03 in 2024. This sharp decline may indicate that the company is taking longer to pay its suppliers, which could potentially strain supplier relationships or signal cash flow challenges.

4. Working Capital Turnover:
- Vontier Corp's working capital turnover fluctuated over the years, with the highest ratio at 8.17 in 2023 and the lowest at 5.36 in 2021. A higher working capital turnover suggests effective utilization of working capital to generate sales revenue. The variation in this ratio may indicate changing business conditions or management strategies affecting working capital efficiency.

In summary, Vontier Corp should monitor its inventory management, payables settlement practices, and working capital efficiency to ensure optimal operational performance and sustainable growth. A comprehensive review of these activity ratios can help the company identify areas for improvement and implement strategic initiatives to enhance overall efficiency in its operations.

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Average number of days

Based on the provided data for Vontier Corp's activity ratios, let's analyze each ratio:

1. Days of Inventory on Hand (DOH):
- Vontier Corp's DOH has been increasing steadily over the years, from 40.74 days in 2020 to 160.44 days in 2024.
- This indicates that the company is holding more inventory for a longer period, which may tie up working capital and increase carrying costs.

2. Days of Sales Outstanding (DSO):
- Vontier Corp's DSO has fluctuated slightly but has not shown a clear trend over the years, ranging from 71.22 days in 2023 to 77.54 days in 2024.
- A stable DSO can indicate effective credit management, but the slight increase in recent years may suggest potential issues with collecting receivables efficiently.

3. Number of Days of Payables:
- Vontier Corp's number of days of payables has shown a significant increase from 64.04 days in 2020 to 179.58 days in 2024.
- This substantial increase indicates that the company is taking longer to pay its suppliers, which could strain supplier relationships or potentially signal liquidity issues.

Overall, the trends in Vontier Corp's activity ratios show a mixed performance. While the company's inventory management has deteriorated over the years, its accounts receivable management has been relatively stable. However, the significant increase in the number of days of payables raises concerns about the company's vendor relations and possibly its financial health. Monitoring and addressing these trends in activity ratios are crucial for maintaining efficient working capital management and sustainable operations.

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Long-term

The Fixed Asset Turnover ratio for Vontier Corp has shown an increasing trend over the years, from 27.60 in 2020 to 29.04 in 2021, peaking at 33.48 in 2022, before slightly decreasing to 30.12 in 2023 and further dropping to 24.71 in 2024.

This upward trend indicates that Vontier Corp has been able to generate more revenue from its fixed assets over time, suggesting efficient utilization of its property, plant, and equipment to generate sales.

On the other hand, the Total Asset Turnover ratio for Vontier Corp has shown fluctuations during the same period. Starting at 0.87 in 2020, decreasing to 0.67 in 2021, and then improving to 0.71 in 2022. The ratio remained relatively stable in 2023 at 0.72 before dropping slightly to 0.69 in 2024.

The Total Asset Turnover ratio measures the efficiency of the company in generating sales from its total assets. The fluctuating trend implies that Vontier Corp's ability to generate sales revenue from all its assets has been mixed, experiencing both improvements and declines over the years.

Overall, while the Fixed Asset Turnover ratio indicates improved efficiency in generating sales from fixed assets, the Total Asset Turnover ratio portrays a more varied picture of revenue generation from all assets, with fluctuations in performance seen over the years.