AdvanSix Inc (ASIX)

Short-term

Turnover ratios

AdvanSix Inc's inventory turnover has shown a declining trend over the past five years, from 6.77 in 2019 to 6.46 in 2023. This indicates that the company is taking longer to sell its inventory, possibly due to changes in demand or inefficiencies in inventory management.

On the other hand, the receivables turnover ratio has been relatively stable, ranging between 8.52 and 12.16 over the same period. This suggests that AdvanSix has been successful in collecting payments from customers in a timely manner.

The payables turnover ratio, measuring how quickly the company pays its suppliers, has also been consistent, hovering between 5.28 and 6.38. This indicates a stable payment policy towards suppliers.

The working capital turnover ratio, which reflects how efficiently the company utilizes its working capital to generate sales, has shown fluctuations over the years, with a significant decrease in 2023 compared to the previous two years. This may imply changes in the company's operating cycle efficiency or capital management strategies.

Overall, while AdvanSix Inc's activity ratios provide insights into its operational efficiency, further analysis and benchmarking against industry peers would be necessary to fully evaluate the company's performance in managing its assets and liabilities.

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Average number of days

AdvanSix Inc's activity ratios provide insights into how efficiently the company is managing its inventory, collecting receivables, and paying its suppliers.

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows an increase from 2019 to 2020, followed by a decrease in 2021 and another increase in 2022 and 2023.
- A higher DOH indicates that inventory is held for a longer period before being sold, potentially tying up working capital and increasing storage costs.
- AdvanSix Inc's DOH has fluctuated over the years, suggesting variations in inventory management efficiency.

2. Days of Sales Outstanding (DSO):
- The trend in DSO shows fluctuations over the years, with a general increase from 2019 to 2020, followed by fluctuations in subsequent years.
- A higher DSO indicates that the company takes longer to collect payments from customers, which may impact cash flow and liquidity.
- AdvanSix Inc's DSO has shown variability, reflecting potential challenges or improvements in managing accounts receivable collection.

3. Number of Days of Payables:
- The trend in the number of days of payables shows fluctuations over the years, with an increase in 2020, followed by fluctuations in subsequent years.
- A higher number of days of payables indicates that the company takes longer to pay its suppliers, potentially affecting supplier relationships.
- AdvanSix Inc's number of days of payables has varied over time, indicating changes in the company's payment practices and liquidity management.

In summary, AdvanSix Inc's activity ratios suggest fluctuations in inventory management, accounts receivable collection, and payment practices over the years. The company may need to focus on optimizing these areas to enhance efficiency and strengthen its working capital management.

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Long-term

The long-term activity ratios of AdvanSix Inc provide insights into the efficiency of the company's utilization of its fixed assets and total assets over the years.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how well a company generates revenue from its investment in fixed assets. A higher ratio indicates better efficiency in utilizing fixed assets to generate sales.
- AdvanSix Inc's fixed asset turnover has fluctuated over the past five years, ranging from 1.51 to 2.40, with a notable decrease in 2020 and a subsequent increase in 2021.
- The decreasing trend in 2020 might indicate a lower revenue generation from fixed assets during that period, possibly due to operational challenges or underutilization of fixed assets.
- The improvement in the fixed asset turnover ratio in 2021 and 2022 suggests that the company was able to enhance its efficiency in utilizing fixed assets to generate sales, leading to a higher turnover of those assets.

2. Total Asset Turnover:
- The total asset turnover ratio evaluates a company's ability to generate revenue in relation to its total assets. It indicates how efficiently the company is using its assets to generate sales.
- AdvanSix Inc's total asset turnover ratio has fluctuated over the past five years, ranging from 0.92 to 1.30, with the lowest ratio recorded in 2020 and the highest in 2022.
- The increase in total asset turnover in 2022 signifies that the company generated more revenue relative to its total assets during that year compared to previous periods. This may indicate improved operational efficiency or more effective utilization of assets to drive sales.
- Despite some fluctuations, the company's total asset turnover ratios generally suggest that AdvanSix Inc has been effective in generating revenue in relation to its total asset base over the years.

In conclusion, while the fixed asset turnover ratio reflects AdvanSix Inc's efficiency in utilizing its fixed assets to generate sales, the total asset turnover ratio provides a broader view of the company's overall efficiency in generating revenue relative to its total asset base. The trends observed in these ratios indicate fluctuations in asset utilization efficiency over the years, with some years showing improvements and others showing declines. Analyzing both ratios together can help in gaining a comprehensive understanding of AdvanSix Inc's long-term activity performance.