Arch Resources Inc (ARCH)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 10.80 | 11.89 | 11.62 | 13.12 | 16.37 |
| Receivables turnover | 11.43 | 15.54 | 6.53 | 13.05 | 13.50 |
| Payables turnover | 12.87 | 12.52 | 13.80 | 15.94 | 16.11 |
| Working capital turnover | 5.69 | 9.29 | 5.89 | 4.88 | 5.75 |
Inventory turnover measures how efficiently a company manages its inventory by indicating how many times during a period inventory is sold and replaced. Arch Resources Inc's inventory turnover has been consistently high over the past five years, ranging between 10.80 and 16.37. This suggests that the company is effectively managing its inventory levels and quickly turning over its stock.
Receivables turnover reflects the efficiency of a company in collecting its accounts receivable. Arch Resources Inc's receivables turnover has varied significantly over the years, with a low of 6.53 in 2021 and a high of 15.54 in 2022. The company's ability to collect its receivables improved significantly in 2022 compared to 2021, but it declined slightly in 2023.
Payables turnover measures how quickly a company pays off its suppliers. Arch Resources Inc's payables turnover has been relatively stable, ranging between 12.52 and 16.11 over the past five years. A higher payables turnover indicates that the company is paying its suppliers more quickly.
Working capital turnover ratio indicates how efficiently a company is using its working capital to generate sales revenue. Arch Resources Inc's working capital turnover has fluctuated over the years, with higher values indicating more efficient utilization of working capital. In 2022, the company demonstrated the highest efficiency at 9.29, while in 2020, it was at its lowest point at 4.88.
Overall, the activity ratios of Arch Resources Inc show that the company has managed its inventory effectively, improved its accounts receivable collection efficiency in 2022, maintained a stable payables turnover, and varied in terms of utilizing working capital efficiently over the past five years.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 33.78 | 30.70 | 31.40 | 27.81 | 22.29 |
| Days of sales outstanding (DSO) | days | 31.94 | 23.48 | 55.89 | 27.97 | 27.04 |
| Number of days of payables | days | 28.35 | 29.16 | 26.44 | 22.90 | 22.66 |
Activity ratios provide insights into how effectively a company is managing its assets and operating cycle. Let's analyze Arch Resources Inc's activity ratios based on the provided data:
1. Days of Inventory on Hand (DOH): Arch Resources Inc's DOH has shown an increasing trend over the past five years, indicating that the company is holding onto inventory for longer periods. This may suggest inefficiencies in inventory management or challenges in matching production with demand. However, the DOH remains at a reasonable level, indicating that the company is not excessively tied up in inventory.
2. Days of Sales Outstanding (DSO): The DSO measure reveals how quickly Arch Resources Inc collects its accounts receivable. The fluctuating DSO figures suggest variability in the company's collection efforts over the years. The significant increase in DSO in 2021 may raise concerns about credit policies or the quality of customers. In contrast, the lower DSO in 2022 and 2019 reflects better efficiency in collecting payments from customers.
3. Number of Days of Payables: Arch Resources Inc's days of payables reflect the time it takes the company to pay its suppliers. The consistent and relatively low number of days of payables over the years suggests that the company manages its payables efficiently. Faster payment to suppliers may help in maintaining good relationships and securing favorable credit terms.
Overall, while Arch Resources Inc demonstrates varying levels of efficiency in managing its inventory, receivables, and payables over the years, the company's ability to maintain a balance in these areas indicates a reasonable level of operational effectiveness. Monitoring these activity ratios can help identify potential areas for improvement in the company's working capital management and operational efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.55 | 3.11 | 1.89 | 1.44 | 2.31 |
| Total asset turnover | 1.26 | 1.52 | 1.00 | 0.84 | 1.22 |
The long-term activity ratios of Arch Resources Inc, as indicated by the fixed asset turnover and total asset turnover ratios, have shown fluctuations over the past five years. The fixed asset turnover ratio measures how efficiently the company generates revenue from its fixed assets. In 2023, the fixed asset turnover ratio slightly decreased to 2.55 from 3.11 in 2022, indicating a potential decrease in the company's ability to generate sales from its fixed assets. Despite the fluctuation, the ratio remains above 2, which suggests that Arch Resources Inc is efficiently utilizing its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio represents the company's ability to generate sales in relation to its total assets. The total asset turnover ratio has shown an increasing trend over the years, from 0.84 in 2020 to 1.26 in 2023. This indicates that Arch Resources Inc has been able to generate more revenue relative to its total assets, reflecting improved operational efficiency and asset utilization. Overall, the company's long-term activity ratios suggest that it has been adept at efficiently utilizing its assets to drive revenue growth, though the fixed asset turnover ratio warrants continued monitoring for any potential impacts on operational efficiency.