Cactus Inc (WHD)

Short-term

Turnover ratios

Cactus Inc's inventory turnover ratio has been gradually declining over the past few years, from 3.94 on March 31, 2020, to 3.09 on December 31, 2024. This indicates that the company is taking longer to sell its inventory, which could be a concern as it may lead to excess inventory holding costs.

The receivables turnover and payables turnover ratios are not available for analysis, as the data is not provided. This lack of information limits our ability to assess the efficiency of Cactus Inc in collecting receivables and managing payables.

The working capital turnover ratio for Cactus Inc has shown fluctuations but has generally improved over time. It increased from 1.76 on March 31, 2020, to 1.90 on December 31, 2024. This suggests that the company is generating more revenue relative to its working capital, which is a positive sign of efficiency in utilizing its resources.

Overall, the declining trend in inventory turnover raises a red flag, and the lack of data for receivables and payables turnover hinders a complete assessment of Cactus Inc's activity ratios. However, the improvement in the working capital turnover ratio indicates some positive aspects of the company's operational efficiency.

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Average number of days

Based on the provided data, the analysis of Cactus Inc's activity ratios is as follows:

1. Days of Inventory on Hand (DOH):
- The Days of Inventory on Hand for Cactus Inc fluctuated over the period from March 31, 2020, to December 31, 2024.
- The DOH ranged from a low of 92.64 days on March 31, 2020, to a peak of 171.89 days on March 31, 2023.
- The trend in the DOH ratio indicates that the company's inventory turnover has been varying significantly.
- Generally, a decreasing trend in DOH is considered positive as it signifies efficient inventory management, while an increasing trend may indicate issues like overstocking or slow sales.

2. Days of Sales Outstanding (DSO):
- The data for Days of Sales Outstanding (DSO) is missing in the provided dataset.
- DSO is a measure of how long it takes for a company to collect its accounts receivable. Without this data, it is challenging to evaluate the company's efficiency in collecting payments from customers.

3. Number of Days of Payables:
- The data for the Number of Days of Payables is also missing in the provided dataset.
- This ratio indicates how long it takes for a company to pay its suppliers. Without this data, it is challenging to assess Cactus Inc's payment practices and liquidity management.

In conclusion, while the analysis of Days of Inventory on Hand provides insights into Cactus Inc's inventory management efficiency, the absence of data on Days of Sales Outstanding and Number of Days of Payables hinders a comprehensive evaluation of the company's overall activity ratios and working capital management.

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Long-term

The fixed asset turnover ratio of Cactus Inc has shown fluctuating trends over the past few years, ranging from 2.00 to 4.49. This ratio indicates how efficiently the company is generating sales from its fixed assets. In recent periods, there has been an increasing trend in the fixed asset turnover ratio, implying that the company is utilizing its fixed assets more effectively to generate revenue.

On the other hand, the total asset turnover ratio of Cactus Inc has exhibited a declining trend from 0.73 to 0.65. This ratio reflects the company's ability to generate sales from all its assets. The decreasing trend in total asset turnover may suggest that the company is becoming less efficient in utilizing all its assets to drive sales.

In conclusion, while Cactus Inc has improved its efficiency in generating sales from fixed assets, there is a declining trend in the overall efficiency of utilizing all assets to generate revenue. Management may need to focus on optimizing the use of total assets to improve the company's financial performance.