AptarGroup Inc (ATR)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company is managing its assets and liabilities to generate sales. Let's analyze the activity ratios of Aptargroup Inc. based on the data provided:

1. Inventory turnover:
Aptargroup's inventory turnover has been relatively stable over the past five years, ranging from 4.33 to 4.86. This indicates that the company is selling and replenishing its inventory approximately 4 to 5 times a year. A lower turnover ratio may suggest overstocking, while a higher ratio might indicate potential stockouts.

2. Receivables turnover:
The receivables turnover for Aptargroup has fluctuated between 4.81 and 5.17 in the last five years. This ratio indicates how quickly the company collects its accounts receivable. A higher turnover implies efficient collection, while a lower ratio may signal potential issues with credit management or collection practices.

3. Payables turnover:
Aptargroup's payables turnover has decreased over the years from 9.43 in 2019 to 6.77 in 2023. This ratio reflects how quickly the company pays its suppliers. A lower turnover could signify potential liquidity problems or a deliberate strategy to extend payment terms, while a higher ratio may suggest strong negotiation power with suppliers.

4. Working capital turnover:
The working capital turnover for Aptargroup has shown fluctuations, with the highest ratio of 11.70 in 2023. This ratio measures how efficiently the company utilizes its working capital to generate sales. A higher turnover indicates effective management of working capital, while a lower ratio may suggest excess or inefficient use of resources.

In conclusion, Aptargroup Inc. has demonstrated moderate efficiency in managing its inventory, receivables, payables, and working capital turnover ratios over the past five years. Further analysis and comparison with industry benchmarks could provide additional insights into the company's operational effectiveness and potential areas for improvement.

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Average number of days

Activity ratios are used to assess how effectively a company is managing its assets and operations. Let's analyze Aptargroup Inc.'s activity ratios based on the provided data:

1. Days of Inventory on Hand (DOH): Aptargroup's average days of inventory on hand have been gradually increasing over the past five years, indicating that inventory turnover has been slowing down. This may suggest inefficiencies in managing inventory levels, potentially leading to higher carrying costs and the risk of obsolescence.

2. Days of Sales Outstanding (DSO): Aptargroup's days of sales outstanding have fluctuated over the years but have generally been within a relatively stable range. A decrease in DSO indicates that the company is collecting receivables more efficiently, while an increase may signal potential issues with credit management or collection procedures.

3. Number of Days of Payables: Aptargroup's number of days of payables has also increased over the years, indicating that the company is taking longer to pay its suppliers. While extending payables can improve cash flow in the short term, excessively long payment cycles may strain supplier relationships and potentially indicate financial distress if suppliers demand faster payments.

Overall, Aptargroup should continue monitoring and potentially optimizing its activity ratios to ensure efficient management of its inventory, receivables, and payables for sustained operational performance and financial health.

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Long-term

The fixed asset turnover ratio measures the efficiency of a company in generating sales revenue from its investments in fixed assets. Aptargroup Inc. has demonstrated a slight decline in fixed asset turnover over the past five years, from 2.63 in 2019 to 2.36 in 2023. This gradual decrease suggests that the company may be becoming less efficient in utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio reflects the firm's ability to generate sales revenue from all its assets. Aptargroup Inc.'s total asset turnover has remained relatively stable over the same period, fluctuating between 0.73 and 0.80. This indicates that the company has been able to maintain a consistent level of sales relative to its total assets.

In summary, while the fixed asset turnover ratio has shown a declining trend, the total asset turnover ratio has been more stable for Aptargroup Inc. This discrepancy suggests that the company may need to evaluate its utilization of fixed assets to improve efficiency and optimize its overall asset turnover in the long term.