Cabot Corporation (CBT)

Short-term

Turnover ratios

Cabot Corporation has shown consistent performance in managing its inventory effectively over the past five years, with an inventory turnover ratio ranging from 4.99 to 5.50. This indicates that the company is efficient in selling its inventory and replenishing it timely.

The receivables turnover ratio has fluctuated over the years but remained relatively stable between 5.17 and 6.25. This suggests that Cabot Corporation has been efficient in collecting payments from its customers, although there may have been some variability in the collection period.

The payables turnover ratio has also shown some variation but has generally been in the range of 5.44 to 7.06. This indicates that the company has been managing its payables effectively by paying its suppliers in a timely manner, although there may have been some changes in the payment practices over the years.

The working capital turnover ratio has shown significant fluctuations, with a sharp decrease in 2021 followed by a gradual increase in subsequent years. This could indicate changes in the company's working capital management strategy, with a focus on optimizing working capital efficiency.

Overall, Cabot Corporation appears to have maintained good control over its activity ratios, reflecting efficient management of its inventory, receivables, payables, and working capital over the analyzed period.

---

Average number of days

The activity ratios of Cabot Corporation, specifically the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables, provide insights into the efficiency of the company's operations and management of working capital.

1. Days of Inventory on Hand (DOH):
- Cabot Corporation's inventory turnover has been relatively stable over the past five years, with the number of days inventory is held decreasing from 73.14 days in 2021 to 66.41 days in 2024. This indicates that the company has been managing its inventory effectively by minimizing excess inventory levels and improving inventory turnover.

2. Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding (DSO) metric reflects Cabot Corporation's ability to collect payments from customers. The DSO has shown some fluctuation over the years, ranging from 58.37 days in 2020 to 70.62 days in 2022, and then decreasing to 66.99 days in 2024. A lower DSO indicates that the company is collecting payments more quickly, which is generally favorable for cash flow and working capital management.

3. Number of Days of Payables:
- The Number of Days of Payables represents the average number of days it takes for the company to pay its suppliers. Cabot Corporation's payables period has varied annually, with a significant increase from 54.56 days in 2020 to 67.13 days in 2021, followed by fluctuations in the subsequent years. A longer payables period can be beneficial for cash flow management as it allows the company to hold onto cash longer before paying its suppliers.

Overall, analyzing Cabot Corporation's activity ratios indicates that the company has been effectively managing its inventory levels, improving collections from customers, and optimizing its payables period to enhance overall operational efficiency and cash flow management.

---

Long-term

Cabot Corporation's long-term activity ratios reflect the efficiency with which the company utilizes its assets to generate revenues. The fixed asset turnover ratio has shown a declining trend over the past five years, decreasing from 3.40 in 2022 to 2.60 in 2024. This suggests that the company is generating fewer sales relative to its investment in long-term assets such as property, plant, and equipment.

On the other hand, the total asset turnover ratio has also exhibited a slight decrease from 1.23 in 2022 to 1.07 in 2024. This ratio indicates Cabot Corporation's ability to generate revenue from all its assets, including both long-term and short-term assets. While the total asset turnover ratio remains relatively stable compared to the fixed asset turnover, the downward trend may signify a potential inefficiency in utilizing the company's total asset base to drive sales.

Overall, the declining trend in both fixed asset turnover and total asset turnover ratios suggests that Cabot Corporation may need to investigate ways to improve asset utilization efficiency to enhance its revenue generation capabilities and overall operational performance in the long term.