Allegheny Technologies Incorporated (ATI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.01 | 2.87 | 2.53 | 3.26 | 3.26 |
| Receivables turnover | 6.48 | 6.21 | 5.63 | 8.27 | 7.36 |
| Payables turnover | 7.16 | 6.21 | 7.04 | 11.18 | 7.23 |
| Working capital turnover | 2.30 | 2.38 | 1.82 | 2.02 | 2.81 |
The activity ratios for ATI Inc demonstrate how efficiently the company is managing its inventory, receivables, payables, and working capital over the past five years.
1. Inventory turnover: The inventory turnover has ranged from 2.36 to 3.02, with the highest turnover in 2019. This indicates that the company is able to sell and replace its inventory relatively quickly. However, the slight decrease in 2023 compared to 2022 suggests that the company may be holding inventory for a longer period.
2. Receivables turnover: The receivables turnover has been relatively stable, ranging from 5.96 to 8.62. A higher turnover ratio indicates that the company is efficient in collecting payments from its customers. The decreasing trend from 2019 to 2021 and then a slight increase in 2022 and 2023 may suggest changes in the company's credit policies or customer payment behavior.
3. Payables turnover: The payables turnover has fluctuated between 5.64 and 9.25. A higher turnover ratio indicates that the company is taking longer to pay its suppliers, which can be beneficial for managing cash flow. The significant decrease in 2022 followed by an increase in 2023 may reflect changes in payment terms or supplier relationships.
4. Working capital turnover: The working capital turnover has ranged from 1.93 to 2.84, indicating how effectively the company is utilizing its working capital to generate sales revenue. The decrease in 2021 followed by a slight rebound in 2022 and 2023 may suggest variations in the company's operating efficiency and capital management.
Overall, the analysis of ATI Inc's activity ratios reveals insights into the company's operational efficiency, inventory management, receivables collection, payables payment patterns, and working capital utilization over the past five years. Further investigation into the underlying factors driving these trends could provide a more comprehensive understanding of the company's financial performance.
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 | 121.12 | 126.98 | 144.41 | 111.98 | 111.90 |
| Days of sales outstanding (DSO) | days | 56.32 | 58.81 | 64.83 | 44.15 | 49.58 |
| Number of days of payables | days | 50.95 | 58.76 | 51.83 | 32.63 | 50.48 |
The activity ratios of ATI Inc over the past five years show fluctuations in the efficiency of the company's operations.
1. Days of Inventory on Hand (DOH):
- ATI Inc's DOH has ranged from 121.01 days in 2019 to 154.83 days in 2021. A high DOH indicates slower inventory turnover, which could lead to increased holding costs and potential obsolescence. The decreasing trend from 2021 to 2023 suggests that ATI Inc has been more efficient in managing its inventory levels.
2. Days of Sales Outstanding (DSO):
- The DSO for ATI Inc varied from 42.32 days in 2020 to 61.27 days in 2021. A lower DSO indicates quicker collection of accounts receivable, which is favorable as it improves cash flow. The decrease in DSO from 2021 to 2023 suggests improved efficiency in collecting receivables.
3. Number of Days of Payables:
- ATI Inc's payables days ranged from 39.44 days in 2020 to 64.69 days in 2022. A higher number of days of payables signifies that the company takes longer to pay its suppliers, which can indicate better cash flow management. The fluctuating trend in payables days indicates variability in ATI Inc's payment practices over the years.
Overall, ATI Inc has made progress in managing its inventory and accounts receivable efficiently, as shown by the decreasing trends in DOH and DSO. However, the fluctuating trend in the number of days of payables indicates possible changes in ATI Inc's relationships with suppliers over the years. It is important for the company to continue monitoring and optimizing these activity ratios to enhance overall operational effectiveness and financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.43 | 2.32 | 1.73 | 1.95 | 1.67 |
| Total asset turnover | 0.81 | 0.81 | 0.62 | 0.71 | 0.72 |
The long-term activity ratios of ATI Inc, focusing on fixed asset turnover and total asset turnover, provide insights into the company's efficiency in utilizing its assets to generate sales over the years.
The fixed asset turnover ratio measures the company's ability to generate sales revenue relative to its investment in fixed assets. ATI Inc's fixed asset turnover has been relatively stable and improving slightly over the years, with values ranging from 1.68 to 2.51. This indicates that the company has been effectively utilizing its fixed assets to generate sales, with a higher ratio suggesting more efficient asset utilization.
On the other hand, the total asset turnover ratio evaluates ATI Inc's overall efficiency in generating sales revenue from all its assets, including both fixed and current assets. The total asset turnover ratio has also shown a positive trend, increasing from 0.73 in 2019 to 0.84 in 2023. This indicates that ATI Inc has been more effective in generating sales from its total asset base over the years, reflecting improved asset utilization efficiency.
Overall, the upward trends in both fixed asset turnover and total asset turnover ratios suggest that ATI Inc has been successful in maximizing its asset utilization to drive sales growth and improve operational efficiency over the analyzed period. It also indicates potential improvements in operational effectiveness and asset productivity.