Axalta Coating Systems Ltd (AXTA)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.11 | 5.50 | 6.10 | 6.33 | 7.01 |
| Receivables turnover | 4.11 | 4.58 | 4.71 | 4.30 | 5.40 |
| Payables turnover | 6.25 | 6.22 | 6.21 | 6.28 | 8.57 |
| Working capital turnover | 3.72 | 3.73 | 3.56 | 2.14 | 2.99 |
Activity ratios provide insights into how efficiently a company is utilizing its resources to generate sales. Let's analyze the activity ratios of Axalta Coating Systems Ltd over the past five years:
1. Inventory turnover:
- Axalta's inventory turnover has shown a fluctuating trend over the past five years, ranging from 4.18 to 4.93. In 2023, the inventory turnover increased to 4.81, indicating that the company is selling its inventory more quickly compared to the previous year. A higher inventory turnover suggests efficient management of inventory levels, reducing the risk of obsolete inventory and freeing up working capital.
2. Receivables turnover:
- The receivables turnover ratio reflects how efficiently Axalta is collecting on its credit sales. The trend has been relatively stable, with values ranging from 4.11 to 5.40. In 2022, there was a decline in receivables turnover to 4.58, but it improved in 2023 to 4.11. A higher turnover indicates that the company is collecting its receivables more quickly, improving cash flow and reducing the risk of bad debts.
3. Payables turnover:
- Axalta's payables turnover has also fluctuated over the years, ranging from 4.35 to 6.03. In 2023, the payables turnover increased to 4.92, suggesting that the company is managing its trade payables more efficiently. A higher payables turnover indicates that Axalta is paying its suppliers more quickly, which could help maintain good relationships and potentially negotiate better terms.
4. Working capital turnover:
- The working capital turnover ratio measures how well Axalta is utilizing its working capital to generate sales revenue. The trend has been mixed over the years, with values ranging from 2.14 to 3.73. In 2023, the working capital turnover decreased slightly to 3.72. A higher ratio indicates that the company is efficiently using its working capital to support its operations and generate sales.
In conclusion, while there have been fluctuations in Axalta Coating Systems Ltd's activity ratios over the past five years, the overall picture suggests that the company is managing its resources reasonably well to drive sales efficiency. Further analysis and comparison to industry benchmarks may provide additional insights into the company's operational 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 | 59.75 | 66.34 | 59.88 | 57.65 | 52.09 |
| Days of sales outstanding (DSO) | days | 88.71 | 79.76 | 77.48 | 84.94 | 67.60 |
| Number of days of payables | days | 58.44 | 58.65 | 58.78 | 58.11 | 42.59 |
Days of inventory on hand (DOH) measures how many days, on average, inventory is held before being sold. A lower number indicates more efficient inventory management. Axalta Coating Systems Ltd's inventory turnover has improved over the years, decreasing from 87.37 days in 2022 to 75.86 days in 2023. This suggests that the company is selling its inventory more quickly, which can lead to lower holding costs and potentially increased liquidity.
Days of sales outstanding (DSO) reflects the average number of days it takes for the company to collect payments after making a sale. A lower DSO is generally better as it indicates more efficient collection of accounts receivable. Axalta Coating Systems Ltd's DSO has fluctuated over the years, with a slight increase in 2023 to 88.71 days from 79.76 days in 2022. This could indicate a potential issue with credit policies or customer payment delays that may impact cash flow.
Number of days of payables shows the average number of days a company takes to pay its suppliers. A higher number implies that the company is taking longer to pay its bills, which can be beneficial for cash flow management. Axalta Coating Systems Ltd's days of payables increased from 2019 to 2023, from 60.51 days to 74.21 days. The increase in days of payables suggests that the company is taking longer to pay its suppliers, potentially improving its working capital position.
Overall, Axalta Coating Systems Ltd has shown improvements in its inventory turnover, although there are slight concerns regarding the increase in days of sales outstanding. However, the increase in days of payables indicates potential benefits for the company's cash flow management.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.30 | 4.10 | 3.72 | 3.13 | 3.66 |
| Total asset turnover | 0.71 | 0.69 | 0.61 | 0.52 | 0.66 |
The long-term activity ratios of Axalta Coating Systems Ltd have shown a mixed trend over the past five years.
1. Fixed asset turnover:
- The fixed asset turnover ratio measures how efficiently the company is utilizing its fixed assets to generate sales.
- Axalta Coating Systems showed a generally increasing trend in fixed asset turnover from 2019 to 2023, indicating better efficiency in using its fixed assets to generate revenue.
- The ratio increased from 3.66 in 2019 to 4.30 in 2023, showing a consistent improvement in asset utilization over the period.
- This indicates that Axalta Coating Systems has been able to generate more revenue for each dollar invested in fixed assets, reflecting operational efficiency in utilizing its long-term assets.
2. Total asset turnover:
- The total asset turnover ratio measures how effectively the company is using all its assets to generate sales.
- Axalta Coating Systems had a fluctuating trend in total asset turnover over the past five years, with ups and downs in the ratio.
- The ratio decreased from 0.66 in 2019 to 0.52 in 2020, before gradually increasing to 0.71 in 2023.
- While the ratio improved in the later years, indicating better asset utilization efficiency, it is still lower than the peak in 2019.
- This suggests that although the company has improved its overall asset turnover, there may still be room for further enhancement in utilizing its total assets to generate sales.
In summary, Axalta Coating Systems Ltd has shown improvement in fixed asset turnover, reflecting better efficiency in utilizing long-term assets to generate revenue. However, the total asset turnover ratio has been more volatile, with some fluctuations over the years but a general uptrend in recent years. The company may benefit from continued efforts to enhance asset utilization efficiency to drive overall operational performance.