Vontier Corp (VNT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|
| Inventory turnover | 2.65 | 7.45 | 8.24 | 8.96 |
| Receivables turnover | 5.12 | 5.05 | 5.11 | 4.96 |
| Payables turnover | 2.14 | 5.98 | 5.56 | 5.70 |
| Working capital turnover | 8.17 | 6.78 | 5.36 | 7.77 |
Vontier Corporation's activity ratios provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital over the past five years.
1. Inventory turnover: The inventory turnover ratio measures how effectively the company sells its inventory during a period. Vontier's inventory turnover has fluctuated over the years but has generally remained within a range of 5 to 7 times per year. A higher ratio indicates better inventory management and faster sales of inventory.
2. Receivables turnover: This ratio evaluates how quickly the company collects its accounts receivable. Vontier's receivables turnover has been consistent, averaging around 6 times per year. A higher turnover ratio signifies that the company efficiently collects payments from customers.
3. Payables turnover: The payables turnover ratio reflects how quickly the company pays its suppliers. Vontier's payables turnover has varied but generally stayed around 4 times per year. A high ratio indicates that the company is paying its suppliers promptly.
4. Working capital turnover: This ratio assesses how efficiently the company utilizes its working capital to generate sales. Vontier's working capital turnover has fluctuated significantly over the years, with a sharp decline in 2021 followed by a recovery in subsequent years. A higher turnover ratio indicates that the company is effectively utilizing its working capital resources.
Overall, Vontier Corporation's activity ratios suggest that the company has been managing its inventory, receivables, payables, and working capital efficiently over the years, with some fluctuations in certain ratios. However, further analysis and comparison with industry benchmarks may provide a more comprehensive understanding of the company's performance in these areas.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 137.91 | 49.00 | 44.32 | 40.74 |
| Days of sales outstanding (DSO) | days | 71.22 | 72.22 | 71.45 | 73.66 |
| Number of days of payables | days | 170.55 | 61.02 | 65.61 | 64.04 |
The activity ratios of Vontier Corporation provide valuable insights into its operational efficiency and effectiveness in managing its inventory, receivables, and payables.
1. Days of inventory on hand (DOH):
- The trend in DOH indicates the number of days it takes for Vontier to sell its inventory.
- The DOH has fluctuated over the past five years, showing an increasing trend from 51.73 days in 2019 to 65.06 days in 2023.
- This suggests that Vontier may be holding onto its inventory for a longer period, which can tie up cash and increase carrying costs.
2. Days of sales outstanding (DSO):
- DSO represents the average number of days it takes for Vontier to collect payment from its customers after making a sale.
- The trend in DSO has been relatively stable over the years, ranging from 58.67 days in 2023 to 64.60 days in 2019.
- A lower DSO indicates faster collection of receivables, which can improve cash flow and liquidity.
3. Number of days of payables:
- This ratio shows the number of days it takes for Vontier to pay its suppliers, reflecting its payment terms and cash management practices.
- The days of payables have varied, with an increasing trend from 73.54 days in 2019 to 80.46 days in 2023.
- A longer period of payables suggests that Vontier is taking longer to settle its obligations, potentially benefiting from extended credit terms.
Overall, Vontier's activity ratios reveal insights into its inventory management, receivables collection efficiency, and payment practices. Monitoring and analyzing these ratios can help assess the company's operational performance and identify areas for improvement in working capital management.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|
| Fixed asset turnover | 30.12 | 33.48 | 29.04 | 27.60 |
| Total asset turnover | 0.72 | 0.71 | 0.67 | 0.87 |
The fixed asset turnover ratio for Vontier Corporation has exhibited a generally increasing trend over the past five years, from 27.20 in 2019 to 30.26 in 2023. This indicates that the company has been able to generate more sales revenue relative to its investment in fixed assets, reflecting increasing efficiency in the utilization of these assets to generate revenue.
On the other hand, the total asset turnover ratio has been somewhat fluctuating, with a peak of 0.98 in 2019 followed by a decreasing trend to 0.72 in 2023. A declining total asset turnover ratio can suggest that Vontier is becoming less efficient in generating sales revenue based on its total asset base. This may indicate challenges in effectively utilizing its total assets to drive revenue growth or potential issues with asset management efficiency over the years.
In conclusion, while the fixed asset turnover ratio shows an improvement in efficiency in utilizing fixed assets, the decreasing trend in total asset turnover raises some concerns about the overall efficiency of the company in generating revenue from its total asset base. Further analysis and investigation into the factors influencing these ratios would be necessary to understand the underlying causes and implications for Vontier Corporation's long-term asset utilization efficiency.