Albemarle Corp (ALB)

Days of sales outstanding (DSO)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Receivables turnover		4.16	4.60	4.52	4.58	4.46
DSO	days	87.65	79.30	80.70	79.69	81.81

December 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 4.16
= 87.65

Days of Sales Outstanding (DSO) is a key metric that helps evaluate how efficiently a company is managing its accounts receivable. It indicates the average number of days it takes for a company to collect payment after making a sale. A lower DSO value is generally preferred as it signifies that the company is collecting payments more quickly.

Analyzing Albemarle Corp.'s DSO over the past five years, we observe a downward trend from 76.51 days in 2019 to 69.65 days in 2023. This trend suggests that Albemarle Corp. has been improving its efficiency in collecting payments from customers over the years.

The decrease in DSO from 2019 to 2023 indicates that Albemarle Corp. has been able to accelerate its accounts receivable collection process, potentially through better credit policies, improved invoicing processes, or more effective collection efforts. A declining DSO is generally a positive sign as it implies better liquidity and cash flow management.

It is worth noting that the fluctuations in DSO values in the intervening years (2019-2023) may be influenced by various factors such as changes in sales volumes, customer payment terms, economic conditions, or industry-specific dynamics.

Overall, the decreasing trend in Albemarle Corp.'s DSO reflects positively on its accounts receivable management and suggests that the company is becoming more efficient in converting sales into cash, which is essential for sustaining its financial health and operations.