Century Aluminum Company (CENX)

Short-term

Turnover ratios

1. Inventory Turnover:
Century Aluminum Company's inventory turnover has shown some fluctuations over the past five years, ranging from a low of 4.49 in 2023 to a high of 7.35 in 2022. This ratio indicates how efficiently the company is managing its inventory levels. A lower turnover ratio may suggest either overstocking or slow-moving inventory, while a higher ratio could imply efficient inventory management.

2. Receivables Turnover:
The receivables turnover ratio for Century Aluminum has been quite variable, reaching a peak of 79.81 in 2022 and dropping to 23.62 in 2023. This ratio reflects how many times a company collects its accounts receivable during a specific period. A higher turnover indicates that the company is collecting its receivables quickly, while a lower turnover may suggest credit collection issues.

3. Payables Turnover:
The payables turnover ratio has also displayed fluctuations for Century Aluminum, with values ranging from 8.58 to 19.16 over the past five years. This ratio assesses how quickly a company pays its suppliers. A lower turnover could imply a longer time taken to pay vendors, while a higher ratio might indicate prompt payment practices.

4. Working Capital Turnover:
Century Aluminum's working capital turnover ratio has shown considerable variability, with a significant increase to 517.95 in 2023 from lower values in the preceding years. This ratio measures how efficiently working capital is being utilized to generate sales. A higher turnover ratio suggests more efficient use of working capital to drive revenue growth.

In conclusion, these activity ratios provide insights into Century Aluminum Company's operational efficiency and effectiveness in managing its inventory, receivables, payables, and working capital. Analysis of these ratios over multiple years can help identify trends and areas needing improvement in the company's working capital management and overall operational performance.

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Average number of days

To analyze Century Aluminum Company's activity ratios, we will look at three key metrics: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

1. Days of Inventory on Hand (DOH):
- In 2023, the company held inventory for an average of 81.37 days before selling it, which is a significant increase from the 2022 figure of 49.69 days.
- This suggests that the company may be facing challenges in managing its inventory efficiently, leading to a longer holding period.
- The trend shows fluctuation in inventory management over the past five years, with 2023 showing the highest number of days.

2. Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding measure how long it takes for the company to collect payment after making a sale.
- Century Aluminum reduced its DSO to 15.45 days in 2023 from 4.57 days in 2022, indicating that the company is collecting payments at a slower rate compared to the previous year.
- Despite the increase in 2023, the company has historically maintained low DSO, suggesting efficient accounts receivable management.

3. Number of Days of Payables:
- The Number of Days of Payables measures the number of days a company takes to pay its suppliers.
- The company has seen an increase in the number of days of payables over the years, with 2023 reporting 42.56 days compared to 20.85 days in 2022.
- This increase indicates that Century Aluminum is taking longer to settle its payables, which could impact its relationships with suppliers.

In conclusion, Century Aluminum Company's activity ratios reflect some concerning trends, such as a significant increase in Days of Inventory on Hand and Number of Days of Payables in 2023. The company needs to focus on improving inventory management and payment processes to enhance efficiency and maintain healthy supplier relationships.

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Long-term

Century Aluminum Company's long-term activity ratios indicate the efficiency with which the company is utilizing its fixed assets and total assets to generate revenue.

The fixed asset turnover ratio has fluctuated over the last five years, ranging from a low of 1.82 in 2020 to a high of 7.69 in 2022. A higher fixed asset turnover ratio suggests that the company is generating more revenue per dollar of fixed assets, indicating improved efficiency in asset utilization. The significant spike in 2022 may indicate a period of increased productivity or strategic investments in fixed assets.

On the other hand, the total asset turnover ratio shows a similar trend, albeit with lower values compared to the fixed asset turnover ratio. The total asset turnover ratio has ranged from 1.15 in 2020 and 2023 to a peak of 3.89 in 2022. This ratio indicates how effectively the company is using all its assets to generate sales. A higher total asset turnover ratio implies that the company is generating more revenue relative to its total assets.

Overall, Century Aluminum Company's long-term activity ratios suggest fluctuations in asset utilization efficiency over the past five years. The company should continue to monitor and improve these ratios to ensure optimal utilization of its assets for revenue generation.