Axalta Coating Systems Ltd (AXTA)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.37 | 6.11 | 5.50 | 6.10 | 6.33 |
| Receivables turnover | 4.23 | 4.11 | 4.58 | 4.71 | 4.30 |
| Payables turnover | 7.10 | 6.24 | 6.22 | 6.21 | 6.28 |
| Working capital turnover | 3.85 | 3.72 | 3.73 | 3.56 | 2.14 |
Based on the provided data for Axalta Coating Systems Ltd, let's analyze the activity ratios:
1. Inventory Turnover: The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times the company sells and replaces its inventory during a specific period. Axalta's inventory turnover has been fluctuating over the years, ranging from 5.50 to 6.37. A higher turnover ratio generally indicates that the company is effectively managing its inventory levels.
2. Receivables Turnover: This ratio reflects how many times a company collects its accounts receivable during a period. Axalta's receivables turnover has shown a slight decrease from 4.71 to 4.23. A higher receivables turnover ratio suggests that the company is efficient in collecting outstanding payments from customers.
3. Payables Turnover: The payables turnover ratio shows how efficiently a company pays its suppliers. Axalta's payables turnover has been fairly stable, with a notable increase in 2024 to 7.10. A higher payables turnover ratio can indicate that the company is taking advantage of credit terms and managing its payables effectively.
4. Working Capital Turnover: This ratio signifies how well a company utilizes its working capital to generate sales. Axalta's working capital turnover has been increasing steadily from 2.14 to 3.85. A higher working capital turnover ratio suggests that the company is effectively using its working capital to support its operations and drive revenue generation.
In summary, while Axalta Coating Systems Ltd has generally shown efficient management of its inventory and working capital, there may be room for improvement in the collection of receivables to further enhance its overall activity ratios. Additionally, the increase in payables turnover indicates effective management of supplier payments, which can positively impact the company's cash flow position.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 57.26 | 59.74 | 66.34 | 59.88 | 57.65 |
| Days of sales outstanding (DSO) | days | 86.34 | 88.72 | 79.76 | 77.48 | 84.94 |
| Number of days of payables | days | 51.41 | 58.45 | 58.65 | 58.78 | 58.11 |
Axalta Coating Systems Ltd's activity ratios indicate the efficiency of its operations in managing inventory, collecting receivables, and paying its suppliers.
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows an increase from 57.65 days in 2020 to 59.88 days in 2021, followed by a slight decrease to 57.26 days in 2024.
- This indicates that the company is holding its inventory for a longer time in recent years, which could tie up funds and affect liquidity.
2. Days of Sales Outstanding (DSO):
- DSO decreased from 84.94 days in 2020 to 77.48 days in 2021, but then increased to 86.34 days in 2024.
- Higher DSO implies that the company takes longer to collect payments from customers, potentially impacting cash flow and liquidity.
3. Number of Days of Payables:
- The number of days of payables remained relatively stable over the years, ranging from 51.41 days in 2024 to 58.78 days in 2021.
- A lower number of days of payables suggests the company is paying its suppliers more quickly, which could indicate good relationships but also pressure on working capital.
Overall, while the company's management of payables seems consistent, the increasing DOH and fluctuating DSO indicate potential inefficiencies in inventory management and collection processes that could impact cash flow and overall working capital management.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.47 | 4.31 | 4.10 | 3.72 | 3.13 |
| Total asset turnover | 0.73 | 0.71 | 0.69 | 0.61 | 0.52 |
Based on the provided data for Axalta Coating Systems Ltd, we can analyze the long-term activity ratios:
1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how efficiently a company generates revenue from its fixed assets.
- Axalta Coating Systems Ltd's fixed asset turnover has been improving over the years, from 3.13 in 2020 to 4.47 in 2024.
- This indicates that the company has become more effective in utilizing its fixed assets to generate sales, reflecting potential improvements in operational efficiency and asset management.
2. Total Asset Turnover:
- The total asset turnover ratio evaluates how well a company utilizes its total assets to generate sales.
- Axalta Coating Systems Ltd's total asset turnover has also shown a positive trend, increasing from 0.52 in 2020 to 0.73 in 2024.
- The rising total asset turnover suggests that the company is using its assets more efficiently to generate revenue, signaling improved productivity and effectiveness in utilizing its resources.
Overall, the increasing trends in both the fixed asset turnover and total asset turnover ratios indicate that Axalta Coating Systems Ltd has been successful in enhancing its asset utilization efficiency over the years. This improvement may result in enhanced profitability, better return on investment, and a stronger financial position for the company in the long term.