Zurn Elkay Water Solutions Corporation (ZWS)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.18 | 2.23 | 2.91 | 5.50 | 4.00 |
| Receivables turnover | 6.74 | 5.39 | 5.14 | 6.18 | 6.07 |
| Payables turnover | 15.65 | 6.98 | 5.12 | 9.41 | 6.60 |
| Working capital turnover | 3.42 | 2.74 | 3.89 | 2.56 | 3.50 |
Based on the activity ratios provided for Zurn Elkay Water Solutions Corporation over the past five years, we can observe the following trends:
1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently the company manages its inventory. Zurn Elkay's inventory turnover has shown fluctuations over the years, with a peak in 2020 and a dip in 2022, before increasing again in 2023.
- A higher inventory turnover indicates that the company is selling its inventory quickly, which can be positive as it reduces holding costs and minimizes the risk of obsolete inventory.
2. Receivables Turnover:
- The receivables turnover ratio reflects how effectively the company collects payments from its customers. Zurn Elkay's receivables turnover has been mostly increasing over the years, indicating an improvement in collecting receivables.
- A higher receivables turnover ratio suggests that the company efficiently manages its credit policies, resulting in faster cash inflows and lower risk of bad debts.
3. Payables Turnover:
- The payables turnover ratio evaluates how quickly the company pays its suppliers. Zurn Elkay's payables turnover has shown significant variability, with a notable increase in 2023 compared to previous years.
- A higher payables turnover ratio could indicate that the company is managing its payables effectively, possibly taking advantage of trade discounts and maintaining good relationships with suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently the company utilizes its working capital to generate sales. Zurn Elkay's working capital turnover has exhibited fluctuations, with varying levels of efficiency in utilizing working capital to generate revenue.
- A higher working capital turnover ratio suggests that the company is effectively using its resources to drive sales growth and generate profits.
Overall, the analysis of Zurn Elkay Water Solutions Corporation's activity ratios indicates improvements in managing inventory and collecting receivables, with fluctuations in payables management and working capital efficiency. These trends can provide insights into the company's operational effectiveness and efficiency in utilizing its resources to drive revenue growth and profitability.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 114.83 | 163.97 | 125.24 | 66.38 | 91.24 |
| Days of sales outstanding (DSO) | days | 54.18 | 67.77 | 71.00 | 59.07 | 60.08 |
| Number of days of payables | days | 23.33 | 52.27 | 71.34 | 38.81 | 55.26 |
The activity ratios of Zurn Elkay Water Solutions Corporation show varying trends over the past five years.
1. Days of Inventory on Hand (DOH): This ratio measures how many days it takes for the company to sell its inventory. In 2023, the DOH decreased to 114.83 days from 163.97 days in 2022, indicating that the company was able to turn over its inventory more efficiently. However, compared to 2021, the DOH increased, suggesting a more aggressive approach to inventory management in 2022 which could have led to higher inventory levels. In 2020 and 2019, the DOH fluctuated, indicating inconsistent inventory management practices over the years.
2. Days of Sales Outstanding (DSO): DSO reflects the average number of days it takes for the company to collect its accounts receivable. The DSO decreased to 54.18 days in 2023 from 67.77 days in 2022, indicating that the company improved its collection efficiency. However, the DSO was higher in 2021 compared to 2019 and 2020, suggesting potential issues with revenue collection during that period.
3. Number of Days of Payables: This ratio measures how long it takes for the company to pay its suppliers. The number of days of payables decreased significantly in 2023 to 23.33 days from 52.27 days in 2022. This indicates that the company paid its suppliers more quickly in 2023, potentially improving supplier relationships or taking advantage of early payment discounts. In 2021 and 2020, the number of days of payables was higher than in 2019, suggesting a change in payment policies or negotiations with suppliers.
Overall, the trends in Zurn Elkay Water Solutions Corporation's activity ratios suggest improvements in inventory turnover and accounts receivable collection efficiency in 2023, along with a more aggressive approach to paying suppliers promptly. However, there were fluctuations in these ratios in previous years, indicating potential challenges in managing working capital effectively.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 9.60 | 7.00 | 14.14 | 5.46 | 5.35 |
| Total asset turnover | 0.57 | 0.45 | 0.85 | 0.57 | 0.63 |
Based on the data provided for Zurn Elkay Water Solutions Corporation, the company's fixed asset turnover ratio has varied over the years. In 2023, the fixed asset turnover ratio was 9.60, indicating that the company generated $9.60 in sales for every $1 of fixed assets it owned. This was an improvement compared to the previous year, where the ratio was 7.00. In 2021, the ratio was substantially higher at 14.14, suggesting the company was efficiently utilizing its fixed assets to generate revenue.
Regarding total asset turnover, the trend also shows variability. In 2023, the total asset turnover ratio was 0.57, indicating that the company generated $0.57 in sales for every $1 of total assets it owned. This was an improvement compared to the previous year, where the ratio was 0.45. However, it was lower than the total asset turnover ratio observed in 2021, which stood at 0.85.
Overall, fluctuations in both fixed asset turnover and total asset turnover ratios suggest changes in the company's efficiency in utilizing its assets to generate revenue. It is essential for the company to evaluate the reasons behind these variations and work towards maintaining or improving its asset utilization efficiency over time.