Balchem Corporation (BCPC)

Short-term

Turnover ratios

Looking at Balchem Corp.'s activity ratios over the past five years, we can see some interesting trends.

1. Inventory Turnover:
Balchem Corp.'s inventory turnover has been relatively stable over the years, ranging from 5.15 in 2019 to 6.79 in 2020. This ratio measures how effectively the company is managing its inventory levels. A higher turnover indicates that the company is selling its inventory more quickly, which is generally positive as it reduces the risk of obsolescence or spoilage.

2. Receivables Turnover:
The receivables turnover has also been consistent, with a slight increase from 6.89 in 2019 to 7.36 in 2023. This ratio reflects how efficiently Balchem is collecting payments from its customers. A higher turnover implies that the company is effectively managing its credit policies and collecting receivables promptly.

3. Payables Turnover:
The payables turnover ratio has shown some variability, with a significant drop in 2020 followed by a gradual increase. The higher turnover in 2020 (20.21) suggests that Balchem was paying its suppliers more frequently. However, a high payables turnover may also indicate a more efficient use of trade credit.

4. Working Capital Turnover:
The working capital turnover ratio has consistently increased over the years, reaching 5.57 in 2023. This ratio measures how efficiently Balchem is using its working capital to generate sales. An increasing trend indicates that the company is making better use of its current assets to drive revenue growth.

In summary, Balchem Corp. has shown relatively stable inventory and receivables turnover ratios, indicating effective management of inventory and receivables. The payables turnover has been more variable but has shown an overall increasing trend, which could suggest improved supplier payment practices. The increasing working capital turnover ratio reflects a positive trend in utilizing working capital efficiently to drive sales.

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Average number of days

Balchem Corp.'s activity ratios provide insight into how efficiently the company manages its inventory, receivables, and payables.

The Days of Inventory on Hand (DOH) measures how long, on average, inventory is held before being sold. Over the past five years, Balchem Corp.'s DOH has fluctuated, ranging from 53.73 days to 70.83 days. In 2023, the DOH decreased slightly to 64.44 days, indicating a moderate improvement in inventory management compared to the previous year.

The Days of Sales Outstanding (DSO) reveals the average number of days it takes for the company to collect payment from its customers. Balchem Corp.'s DSO has also varied, with values ranging from 49.57 days to 52.99 days. In 2023, the DSO decreased to 49.57 days, suggesting that the company is collecting receivables more efficiently than in the previous year.

The Number of Days of Payables represents how long the company takes to pay its suppliers. Balchem Corp.'s payables period has been inconsistent, with significant fluctuations in the range of 18.06 days to 36.93 days. In 2023, the payables period increased to 32.65 days, indicating that the company is taking slightly longer to settle its payables compared to the prior year.

Overall, while Balchem Corp. has shown some improvements in managing its inventory and receivables in 2023, there is a need to monitor the fluctuating payables period to ensure effective working capital management.

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Long-term

The long-term activity ratios for Balchem Corp. reveal insights into the company's efficiency in utilizing its fixed assets and total assets to generate sales over the past five years.

The fixed asset turnover ratio has demonstrated a generally positive trend, increasing from 2.97 in 2019 to 3.34 in 2023. This indicates that the company has become increasingly efficient in generating sales from its fixed assets over time. A higher fixed asset turnover ratio is favorable as it suggests that Balchem is effectively leveraging its investment in long-term assets to drive revenue.

Meanwhile, the total asset turnover ratio has shown some fluctuation but has remained relatively stable over the period, ranging from 0.56 in 2019 to 0.58 in 2023. This ratio signifies the company's ability to generate sales in relation to its total assets. While the ratio is lower compared to the fixed asset turnover, this is expected as total assets encompass both fixed and current assets.

Overall, the improving trend of the fixed asset turnover ratio coupled with the stable performance of the total asset turnover ratio suggests that Balchem Corp. has been successful in optimizing the utilization of its long-term assets to drive sales growth and overall operational efficiency.