Air Products and Chemicals Inc (APD)

Activity ratios

Short-term

Turnover ratios

	Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Inventory turnover	12.06	15.50	20.22	17.80	14.47
Receivables turnover	6.00	6.43	6.87	6.70	6.47
Payables turnover	6.36	8.33	9.28	10.97	10.73
Working capital turnover	5.54	9.66	4.51	1.85	1.41

Air Products and Chemicals Inc's inventory turnover has been consistently decreasing over the past five years, indicating that the company is holding onto inventory for a longer period before selling it. This suggests potential inefficiencies in inventory management or a slowdown in sales.

The receivables turnover ratio has also shown a slight decreasing trend, which means that the company is taking longer to collect payments from its customers. This may indicate issues with credit policies or challenges in collecting receivables on time.

On the other hand, the payables turnover ratio has been decreasing over the years, implying that the company is taking longer to pay its suppliers. This could be a strategy to optimize cash flow or negotiate more favorable payment terms with suppliers.

The working capital turnover ratio has been fluctuating over the years, with a significant increase in 2023 followed by a decrease in 2024. This ratio measures how efficiently the company is utilizing its working capital to generate sales. The large fluctuations may indicate changes in the company's operational efficiency or financial management practices.

Overall, these activity ratios suggest that Air Products and Chemicals Inc may need to further analyze and potentially improve its inventory management, accounts receivable collection, and accounts payable processes to optimize its working capital efficiency.

Average number of days

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Days of inventory on hand (DOH)	days	30.26	23.55	18.05	20.50	25.22
Days of sales outstanding (DSO)	days	60.86	56.78	53.16	54.50	56.45
Number of days of payables	days	57.35	43.82	39.35	33.28	34.03

Air Products and Chemicals Inc's activity ratios show a fluctuating trend over the past five years. The Days of Inventory on Hand (DOH) have increased from 2019 to 2020, followed by a substantial decrease in 2022, and a subsequent increase in 2023 and 2024. This indicates that the company held inventory for a longer period in 2020, reduced it significantly in 2022, but extended it again in the following years.

The Days of Sales Outstanding (DSO) have also exhibited a fluctuating pattern, with a slight increase in 2021, followed by dips in 2022 and 2023, and a significant rise in 2024. This suggests that the company's accounts receivable turnover varied during these years, impacting the collection period for sales.

The Number of Days of Payables reflects the company's payment cycle to its suppliers, showing an inconsistent trend. There was an increase in payables days from 2020 to 2022, followed by decreasing trends in 2023 and 2024. This indicates changes in the company's payment policies and its ability to manage cash flow effectively.

Overall, these activity ratios suggest that Air Products and Chemicals Inc has experienced fluctuations in its inventory management, accounts receivable turnover, and payment to suppliers strategies over the past five years. The company may need to focus on improving inventory turnover, optimizing accounts receivable collection, and maintaining stable payment terms with suppliers to enhance its operational efficiency and financial performance.

Long-term

	Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Fixed asset turnover	0.52	0.72	0.90	0.78	0.74
Total asset turnover	0.31	0.39	0.47	0.38	0.35

Air Products and Chemicals Inc's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into the efficiency of the company in utilizing its assets to generate sales.

The fixed asset turnover ratio has been declining over the past five years, indicating that Air Products and Chemicals Inc is generating fewer sales relative to its investment in fixed assets. A lower fixed asset turnover ratio could suggest either underutilization of fixed assets or potential inefficiencies in production processes.

Similarly, the total asset turnover ratio has also been decreasing, signaling a reduction in sales generated per dollar of total assets. This decline may be indicative of the company's inability to efficiently convert its total assets into revenue, possibly due to factors such as increasing asset base without equivalent revenue growth or operational inefficiencies.

Overall, the decreasing trend in both fixed asset turnover and total asset turnover ratios for Air Products and Chemicals Inc raises concerns about the company's asset utilization efficiency and implies the need for management to assess and address potential inefficiencies in the utilization of both fixed and total assets to improve overall operational performance and profitability.