Albemarle Corp (ALB)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.54 | 3.90 | 2.05 | 2.92 | 2.84 |
| Receivables turnover | 4.21 | 4.16 | 4.60 | 4.52 | 4.58 |
| Payables turnover | — | — | 2.77 | 3.88 | 4.42 |
| Working capital turnover | 2.87 | 5.81 | 2.99 | 27.89 | 7.74 |
Albemarle Corp's activity ratios reveal important insights into the efficiency of the company's operations.
1. Inventory Turnover:
- The inventory turnover ratio measures how many times the company sells and replaces its inventory during a specific period.
- Albemarle Corp's inventory turnover has been relatively stable, ranging from 2.05 to 3.90 over the years provided.
- A higher inventory turnover indicates that Albemarle Corp is managing its inventory well, selling products quickly, and avoiding excess inventory carrying costs.
2. Receivables Turnover:
- The receivables turnover ratio indicates how efficiently the company is collecting on its credit sales.
- Albemarle Corp's receivables turnover has remained consistent, ranging from 4.16 to 4.60.
- A stable receivables turnover suggests that the company has effective credit policies and collections practices in place.
3. Payables Turnover:
- The payables turnover ratio demonstrates how quickly the company is paying its suppliers.
- Albemarle Corp's payables turnover decreased over the years, from 4.42 in 2020 to '—' in 2023 and 2024 (implying missing data).
- A declining payables turnover may indicate changes in payment terms or supplier relationships, which could impact cash flow management.
4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently the company uses its working capital to generate sales.
- Albemarle Corp's working capital turnover fluctuated significantly, with a notable increase in 2021 followed by a decline in subsequent years.
- A higher working capital turnover ratio suggests that the company is effectively utilizing its resources to generate revenue.
Overall, Albemarle Corp's activity ratios reflect its competence in managing inventory, receivables, payables, and working capital. Monitoring these ratios can help evaluate the company's operational efficiency and identify areas for potential improvement.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 103.18 | 93.56 | 178.48 | 125.11 | 128.32 |
| Days of sales outstanding (DSO) | days | 86.79 | 87.65 | 79.30 | 80.70 | 79.69 |
| Number of days of payables | days | — | — | 131.85 | 94.07 | 82.65 |
Albemarle Corp's activity ratios provide insights into the efficiency of its operations in managing inventory, collecting receivables, and paying suppliers.
1. Days of Inventory on Hand (DOH):
- The company's DOH has fluctuated over the years: from 128.32 days in 2020 to 178.48 days in 2022, then declining to 93.56 days in 2023 and slightly increasing to 103.18 days in 2024.
- A lower DOH indicates that the company is efficiently managing its inventory levels, turning over stock more quickly, which can result in lower holding costs and reduced risk of obsolete inventory.
2. Days of Sales Outstanding (DSO):
- Albemarle Corp's DSO remained relatively stable over the years, ranging from 79.69 days in 2020 to 86.79 days in 2024.
- A lower DSO implies that the company is collecting receivables faster, improving cash flow and reducing the risk of bad debts.
3. Number of Days of Payables:
- The data shows an increasing trend in the number of days of payables from 82.65 days in 2020 to 131.85 days in 2022. However, there is no data available for 2023 and 2024.
- A higher number of days of payables suggests that the company is taking longer to pay its suppliers, which may indicate an extended liquidity position or potentially strained supplier relationships.
Overall, analyzing these activity ratios together provides a comprehensive view of how efficiently Albemarle Corp is managing its working capital, inventory, receivables, and payables. A balance between these components is crucial for maintaining optimal liquidity and operational efficiency.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.58 | 1.01 | 1.05 | 0.56 | 0.58 |
| Total asset turnover | 0.32 | 0.53 | 0.47 | 0.30 | 0.30 |
Albemarle Corp's fixed asset turnover ratio indicates the company's efficiency in generating sales revenue from its investment in fixed assets. The trend from 2020 to 2024 shows some fluctuations, starting at 0.58 in 2020, decreasing to 0.56 in 2021, then improving significantly to 1.05 in 2022, and slightly declining to 1.01 in 2023 before dropping back to 0.58 in 2024.
The increase in the fixed asset turnover ratio from 2021 to 2022 suggests that Albemarle effectively utilized its fixed assets to generate sales, indicating improved operational efficiency. However, the drop in this ratio in 2024 may indicate a potential decrease in sales revenue generated from its fixed assets compared to the previous year.
On the other hand, Albemarle Corp's total asset turnover ratio reflects the company's ability to generate sales revenue in relation to its total assets. The ratios remained relatively stable at 0.30 in 2020 and 2021, experienced an increase to 0.47 in 2022, further improved to 0.53 in 2023, before declining to 0.32 in 2024.
The general trend of total asset turnover ratios indicates that Albemarle's efficiency in utilizing its total assets to generate revenue improved significantly from 2020 to 2023 but dropped in 2024. The decrease in 2024 may suggest a lower level of sales generated per total asset, possibly indicating less efficient asset utilization during that period.
Overall, the analysis of both fixed asset turnover and total asset turnover ratios suggests that Albemarle Corp's operational efficiency in generating sales revenue from its assets has shown some variability over the years, with improvements observed in certain periods but a decline in others. This information can be valuable for stakeholders evaluating the company's long-term asset management performance.