Worthington Industries Inc (WOR)
Activity ratios
Short-term
Turnover ratios
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.84 | 7.00 | 5.96 | 4.48 | 6.46 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 2.51 | 4.27 | 6.14 | 2.69 | 5.14 |
The inventory turnover ratio for Worthington Industries Inc has fluctuated over the past five years, indicating how many times the company's inventory is being sold and replaced within a given period. The ratio decreased from 6.46 in May 2020 to 4.48 in May 2021, before improving to 5.96 in May 2022, reaching a peak of 7.00 in May 2023, and then declining slightly to 5.84 in May 2024. These fluctuations suggest changes in inventory management efficiency.
The receivables turnover ratio, which measures how many times a company collects its accounts receivable during a specific period, is not provided in the data, indicating a lack of information on this aspect of Worthington Industries' operations.
Similarly, the payables turnover ratio, which assesses how quickly a company pays its suppliers, is not available in the data, leading to a lack of insight into the company's payment practices.
The working capital turnover ratio, which shows how effectively the company utilizes its working capital to generate revenue, declined from 5.14 in May 2020 to 2.69 in May 2021. However, it improved to 6.14 in May 2022 before decreasing to 4.27 in May 2023 and further dropping to 2.51 in May 2024. These variations indicate changes in the company's ability to generate sales revenue relative to its working capital investment over the years.
Average number of days
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 62.54 | 52.18 | 61.20 | 81.40 | 56.53 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Activity ratios, such as Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables, provide insights into Worthington Industries Inc's efficiency in managing its inventory, accounts receivable, and accounts payable.
1. Days of Inventory on Hand (DOH):
- On May 31, 2020, Worthington Industries held inventory for an average of 56.53 days before it was sold.
- This figure increased to 81.40 days on May 31, 2021, indicating an increase in the time taken to sell inventory.
- By May 31, 2022, the DOH decreased to 61.20 days, suggesting an improvement in inventory turnover.
- On May 31, 2023, there was a further reduction to 52.18 days, indicating that the company was selling inventory at a faster rate.
- As of May 31, 2024, the DOH increased slightly to 62.54 days, which may require closer monitoring.
2. Days of Sales Outstanding (DSO):
- There is no data available for Days of Sales Outstanding, which could indicate that Worthington Industries does not track this metric or has negligible accounts receivable balances.
3. Number of Days of Payables:
- Similarly, there is no information provided for the Number of Days of Payables, which could suggest that details regarding the company's accounts payable payment terms and efficiencies are not disclosed or are not significant.
In summary, Worthington Industries Inc's inventory management seems to have fluctuated over the years, with improvements in certain periods but potential challenges in others. However, the lack of data for Days of Sales Outstanding and Number of Days of Payables makes it difficult to assess the company's overall working capital efficiency comprehensively.
Long-term
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | 6.34 | 6.59 | 5.76 | 5.34 |
| Total asset turnover | 0.76 | 1.35 | 1.44 | 0.94 | 1.31 |
The fixed asset turnover ratio measures how efficiently the company is generating sales from its investment in fixed assets. Over the years, Worthington Industries Inc has shown a consistent improvement in its fixed asset turnover ratio, increasing from 5.34 in May 2020 to 6.34 in May 2023, before the data point for May 31, 2024 was unavailable.
This indicates that the company has been able to generate more sales revenue relative to its investment in fixed assets, which is a positive sign of operational efficiency and asset utilization.
In contrast, the total asset turnover ratio reflects how effectively the company is utilizing all its assets to generate sales. Worthington Industries Inc experienced some fluctuations in its total asset turnover ratio, with a significant decrease from 1.31 in May 2020 to 0.94 in May 2021, followed by an increase to 1.44 in May 2022, and a subsequent decline to 1.35 in May 2023. The ratio dropped quite significantly to 0.76 in May 2024.
The fluctuations in the total asset turnover ratio may indicate changes in the company's sales performance relative to its total asset base. The decrease in the total asset turnover indicated by the significant drop in 2024 could suggest that the company may not be generating sales efficiently relative to its total assets, which could be a point of concern.
Overall, while the trend in fixed asset turnover is positive, the fluctuating trend in total asset turnover ratios may warrant further investigation to understand the underlying factors affecting the company's asset utilization and sales efficiency.