Alcoa Corp (AA)

Short-term

Turnover ratios

The analysis of Alcoa Corp's activity ratios reveals important insights into the company's operational efficiency and liquidity management:

1. Inventory turnover: Alcoa Corp's inventory turnover ratio fluctuated over the years but generally stayed within the range of 3.62 to 5.81. A decreasing trend in the inventory turnover ratio may indicate excess inventory levels, which could lead to higher storage costs and potential obsolescence. On the other hand, an increasing ratio suggests better inventory management and faster conversion of stock into sales.

2. Receivables turnover: The data shows that the company did not provide specific figures for the receivables turnover ratio. This could indicate that the company may not report this metric or that it may not be as relevant for Alcoa Corp's business operations.

3. Payables turnover: Similar to the receivables turnover ratio, Alcoa Corp did not report specific figures for the payables turnover ratio. This may imply that the company's management does not consider this ratio as a key indicator of its performance or that payables turnover is not a primary focus in its financial reporting.

4. Working capital turnover: Alcoa Corp's working capital turnover ratio fluctuated over the years, ranging from 5.10 to 10.16. A higher working capital turnover ratio indicates that the company is effectively utilizing its working capital to generate sales revenue. However, a declining ratio may suggest inefficiencies in managing working capital or potential liquidity issues.

Overall, analyzing these activity ratios provides valuable insights into Alcoa Corp's operational efficiency, inventory management, and working capital utilization. Investors and stakeholders can use this information to assess the company's ability to convert assets into sales, manage inventory levels effectively, and optimize working capital to drive business performance.

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Average number of days

The days of inventory on hand for Alcoa Corp fluctuated over the period from March 31, 2020, to December 31, 2024. It decreased from 65.71 days on March 31, 2020, to a low of 62.80 days on March 31, 2021, before showing an upward trend, peaking at 100.72 days on March 31, 2022. Thereafter, it gradually decreased to 72.61 days on December 31, 2024.

The days of sales outstanding and the number of days of payables are not provided in the data, making it difficult to comprehensively assess the efficiency of Alcoa Corp in collecting receivables and managing its payables turnover.

In general, a higher days of inventory on hand may indicate excess or slow-moving inventory, tying up working capital and potentially leading to higher storage costs. Conversely, a very low days of inventory on hand could signal inventory shortages or an inability to meet customer demand. Therefore, it is crucial for Alcoa Corp to analyze its inventory management practices and strive for an optimal balance in inventory levels to support operational efficiency and financial performance.

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Long-term

The fixed asset turnover ratio of Alcoa Corp has shown a generally increasing trend from March 31, 2020, to June 30, 2022, indicating that the company is generating more revenue from its fixed assets over time. The ratio peaked at 2.10 on September 30, 2022, suggesting that Alcoa was utilizing its fixed assets efficiently to generate sales.

However, there was a slight decline in the fixed asset turnover ratio towards the end of the period, with the ratio dropping to 1.84 by March 31, 2024. This decrease may indicate a potential slowdown in the company's ability to generate sales from its fixed assets.

On the other hand, the total asset turnover ratio of Alcoa Corp fluctuated over the period, generally showing a downward trend from December 31, 2020, to March 31, 2023. This decline suggests that the company may be less efficient in generating sales from its total assets during this period.

The total asset turnover ratio did see a slight improvement from March 31, 2023, to December 31, 2024, reaching a ratio of 0.85 by the end of the period. This increase indicates a potential enhancement in Alcoa's overall efficiency in utilizing its assets to generate revenue.

In conclusion, while the fixed asset turnover ratio of Alcoa Corp showed an increasing trend followed by a slight decline, indicating efficient utilization of fixed assets, the total asset turnover ratio fluctuated over the period, suggesting varying efficiency in generating sales from total assets. It would be essential to monitor these ratios to assess Alcoa's asset management efficiency effectively.