Woodward Inc (WWD)

Short-term

Turnover ratios

Based on the activity ratios for Woodward Inc, there are several notable trends. The inventory turnover has shown a slight increase over the years, from 3.61 in 2022 to 4.32 in 2023, indicating that the company is managing its inventory more efficiently. The receivables turnover has declined slightly from 4.84 in 2019 to 3.81 in 2023, suggesting a potential delay in collecting receivables.

The payables turnover has fluctuated over the years, with a significant decrease in 2020 and a subsequent increase in 2023, indicating changes in the company's payment cycle. The working capital turnover has also varied, with a peak in 2019 followed by a decline and then a subsequent increase in 2023.

Overall, Woodward Inc's activity ratios reflect some variability in the management of its inventory, receivables, payables, and working capital over the years. Further analysis of the underlying reasons for these changes could provide insights into the company's operational efficiency and financial management.

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Average number of days

To analyze Woodward Inc's activity ratios, we will focus on three key metrics: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

1. Days of Inventory on Hand (DOH):
Woodward Inc's DOH decreased to 84.49 days in 2023 from 101.06 days in 2022. This indicates that the company is managing its inventory more efficiently, possibly through better inventory management practices or a change in its production or sales processes.

2. Days of Sales Outstanding (DSO):
Woodward Inc's DSO increased to 95.68 days in 2023 from 94.23 days in 2022. This suggests that the company's accounts receivable turnover has decreased, indicating a longer time taken to collect payments from customers. Woodward Inc may need to review its credit policies and collection processes to improve this ratio.

3. Number of Days of Payables:
Woodward Inc's number of days of payables decreased to 38.23 days in 2023 from 45.30 days in 2022. This suggests that the company is paying its suppliers more quickly. A decrease in the number of days of payables could indicate improved relationships with suppliers or a change in the company's payment policies.

Overall, Woodward Inc's activity ratios show improved inventory management and quicker payments to suppliers, although there is a need to address the increase in days of sales outstanding to ensure efficient cash flow management.

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Long-term

Woodward Inc's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into the efficiency with which the company utilizes its assets to generate sales. The fixed asset turnover has been improving steadily from 2.76 in 2019 to 3.19 in 2023, indicating that the company has become more effective in utilizing its fixed assets to generate sales over the years. This suggests that Woodward Inc has been able to increase its sales in relation to its investment in fixed assets, a positive sign of improved efficiency.

On the other hand, the total asset turnover has fluctuated over the years, from 0.64 in 2020 to 0.73 in 2019, subsequently dropping to 0.55 in 2021 before rising to 0.73 in 2023. This indicates that the company's ability to generate sales from all its assets has been inconsistent. However, the recent improvement in total asset turnover suggests that Woodward Inc has been able to generate more sales relative to its total assets, potentially signaling improved overall asset efficiency.

Overall, the trend in both ratios indicates that Woodward Inc has become more efficient in utilizing its assets to generate sales over time, with the fixed asset turnover showing a consistent improvement and the total asset turnover exhibiting a recent positive upturn. These improvements in asset turnover ratios reflect positively on the company's operational efficiency and could potentially lead to enhanced financial performance in the long term.