Worthington Industries Inc (WOR)
Activity ratios
Short-term
Turnover ratios
| May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 21.87 | 5.96 | 4.48 | 6.46 | 6.77 |
| Receivables turnover | 7.05 | 5.97 | 4.94 | 8.76 | 7.33 |
| Payables turnover | 33.56 | 6.77 | 4.46 | 10.59 | 8.33 |
| Working capital turnover | 4.27 | 6.14 | 2.69 | 5.14 | 8.04 |
Worthington Enterprises Inc.'s activity ratios provide insight into the efficiency of its asset management and overall operational performance.
The inventory turnover ratio has shown an increasing trend over the past five years, indicating that the company is effectively managing its inventory levels. This signifies that the company is selling through its inventory more quickly, which can lead to lower holding costs and potentially higher sales.
The receivables turnover ratio has also shown a consistent upward trend, reflecting the company's ability to collect outstanding receivables in a timely manner. This suggests efficient credit and collection policies, which can positively impact cash flow and reduce the risk of bad debts.
The payables turnover ratio has fluctuated over the years, with a notable increase in 2020, followed by a slight decline in 2021 and then another increase in 2022 and 2023. This may indicate changes in the company's payment practices with its vendors and suppliers.
The working capital turnover ratio has shown some fluctuation as well, with a decrease in 2021, followed by a rebound in 2022 and 2023. This ratio reflects how effectively the company is using its working capital to generate sales. The increase in 2022 and 2023 suggests improved efficiency in utilizing working capital to drive revenue.
Overall, the consistently high turnover ratios across inventory, receivables, and payables indicate that Worthington Enterprises Inc. has been effectively managing its assets and operations to drive sales and control costs. However, the fluctuations in some ratios may warrant further investigation to understand the underlying factors driving these changes.
Average number of days
| May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 16.69 | 61.20 | 81.40 | 56.53 | 53.90 |
| Days of sales outstanding (DSO) | days | 51.75 | 61.14 | 73.88 | 41.69 | 49.79 |
| Number of days of payables | days | 10.88 | 53.89 | 81.78 | 34.47 | 43.80 |
To analyze the activity ratios of Worthington Enterprises Inc., we will focus on the days of inventory on hand (DOH), days of sales outstanding (DSO), and the number of days of payables. These ratios provide valuable insights into the efficiency of the company's inventory management, collection of receivables, and management of payables.
Starting with the days of inventory on hand (DOH), we can observe a significant improvement in inventory management over the five-year period. In 2023, the DOH decreased to 52.18 days from 61.20 days in 2022. This indicates that the company is now holding less inventory on hand, which can lead to lower holding costs and improved cash flow.
Moving to the days of sales outstanding (DSO), we note a consistent improvement in the collection of receivables. The DSO decreased to 51.75 days in 2023 from 61.14 days in 2022, reflecting the company's ability to collect revenue more efficiently. A lower DSO signifies a shorter collection period, which can enhance cash flow and liquidity.
Finally, examining the number of days of payables, we can observe fluctuations over the five-year period. In 2023, the days of payables decreased to 45.39 days from 53.89 days in 2022. This suggests that the company is paying its suppliers more promptly. However, it is noteworthy that the payables period has increased significantly compared to prior years, indicating a potential shift in the company's payment policies.
In conclusion, the analysis of activity ratios for Worthington Enterprises Inc. demonstrates improvements in inventory management and receivables collection. However, the management of payables shows volatility over the years, which may warrant further investigation into the company's supplier relationships and cash management practices.
Long-term
| May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 19.17 | 7.53 | 6.16 | 5.34 | 6.50 |
| Total asset turnover | 1.35 | 1.44 | 0.94 | 1.31 | 1.50 |
The long-term activity ratios for Worthington Enterprises Inc. suggest the company's efficiency in utilizing its assets to generate sales revenue. The fixed asset turnover, which measures the efficiency of generating sales from fixed assets, has shown a fluctuating trend over the past five years. The ratio decreased from 2019 to 2020, then increased in 2021 and 2022, and dropped again in 2023. This indicates some variability in how effectively the company is utilizing its fixed assets to generate sales.
On the other hand, the total asset turnover, which reflects the overall efficiency of generating sales from all assets, also depicts a fluctuating pattern over the years. The ratio decreased significantly in 2021, indicating a potential decrease in the company's ability to generate sales from its total assets. However, it slightly recovered in 2022, before dropping again in 2023.
The declining trend in both the fixed asset turnover and total asset turnover from 2022 to 2023 might suggest a potential decrease in sales generated from the company's assets or an increase in the value of the assets themselves. This could be a cause for further investigation to assess the underlying reasons for the decline and to identify potential areas for improvement in asset utilization. Overall, these ratios indicate that Worthington Enterprises Inc. may need to focus on optimizing its asset utilization to enhance its long-term operational efficiency and productivity.