Archer-Daniels-Midland Company (ADM)

Short-term

Turnover ratios

Archer-Daniels-Midland Company's activity ratios provide valuable insights into the efficiency of the company's operations.

1. Inventory Turnover: This ratio measures how many times a company's inventory is sold and replaced over a period. The trend for Archer-Daniels-Midland shows an improvement from 5.11 in 2020 to 6.89 in 2024. This increase indicates that the company is managing its inventory more effectively and selling goods at a faster rate.

2. Receivables Turnover: Unfortunately, there is no data available for this ratio for the years provided. Receivables turnover generally indicates how quickly a company is collecting on credit sales, and its absence in the data might suggest a lack of focus or priority on efficient accounts receivable management.

3. Payables Turnover: Similarly, data for payables turnover is missing for the years provided. Payables turnover measures how quickly a company pays its suppliers, and its absence in the data prevents a thorough analysis of the company's liquidity management and relationships with suppliers.

4. Working Capital Turnover: This ratio assesses how efficiently a company is utilizing its working capital to generate sales. The trend for Archer-Daniels-Midland shows an increase from 7.07 in 2020 to 10.99 in 2024, indicating that the company is using its working capital more effectively to drive revenue growth.

In general, an improvement in inventory turnover and working capital turnover ratios over time demonstrates that Archer-Daniels-Midland is becoming more efficient in managing its resources and generating sales, which can lead to improved profitability and overall financial performance.

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Average number of days

Based on the provided data, we can analyze the activity ratios of Archer-Daniels-Midland Company as follows:

1. Days of Inventory on Hand (DOH):
- The days of inventory on hand indicate the average number of days it takes for the company to sell its inventory.
- Over the five-year period from 2020 to 2024, Archer-Daniels-Midland has shown a decreasing trend in its DOH, which is a positive sign.
- The company has improved its inventory management efficiency, with the DOH reducing from 71.37 days in 2020 to 52.96 days in 2024.
- A lower DOH implies that the company is selling its inventory more quickly, potentially reducing holding costs and minimizing the risk of obsolete inventory.

2. Days of Sales Outstanding (DSO):
- Unfortunately, there is no data available for Days of Sales Outstanding (DSO) for Archer-Daniels-Midland for the years provided (2020 to 2024).
- DSO measures the average number of days it takes the company to collect payment after making a sale.
- Without DSO data, it is challenging to assess the company's efficiency in collecting receivables and managing its accounts receivable turnover.

3. Number of Days of Payables:
- Similar to DSO, there is no information available on the Number of Days of Payables for Archer-Daniels-Midland for the years 2020 to 2024.
- The number of days of payables represents the average number of days the company takes to pay its suppliers.
- Without this data, it is not possible to evaluate the company's payment practices and its ability to manage its payables effectively.

In conclusion, based on the data provided, we can see that Archer-Daniels-Midland has improved its inventory management efficiency over the period, as indicated by the decreasing trend in Days of Inventory on Hand. However, due to the lack of data on Days of Sales Outstanding and Number of Days of Payables, a comprehensive assessment of the company's overall activity ratios and working capital management practices is limited.

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Long-term

Archer-Daniels-Midland Company's long-term activity ratios reflect the efficiency of its utilization of fixed assets and total assets in generating sales revenue over the years.

The fixed asset turnover ratio, which measures how effectively the company is using its fixed assets to generate revenue, has shown a positive trend from 6.47 in 2020 to 10.25 in 2022. This increase indicates that the company has been able to generate more sales revenue per dollar invested in fixed assets, highlighting improved efficiency in utilizing its long-term assets for revenue generation. However, there is missing data for the years 2023 and 2024, which makes it difficult to assess the trend for these years.

In contrast, the total asset turnover ratio, which gauges how efficiently the company is using all its assets to generate sales, has shown a slightly fluctuating trend. It increased from 1.29 in 2020 to 1.70 in 2022, indicating that the company was generating more revenue per dollar invested in total assets. However, there was a slight decrease to 1.61 in 2024, suggesting a potential slight decrease in efficiency in utilizing all assets for revenue generation.

Overall, the fixed asset turnover ratios show a positive trend, indicating improved efficiency in utilizing long-term assets for revenue generation, while the total asset turnover ratio shows a slightly fluctuating trend, which could potentially point to changes in the company's asset management efficiency over the years.