Century Aluminum Company (CENX)

Short-term

Turnover ratios

Based on the provided data for Century Aluminum Company, let's analyze the activity ratios:

1. Inventory Turnover: The inventory turnover ratio measures the number of times a company sells and replaces its inventory during a period. Century Aluminum's inventory turnover ranged from 3.89 to 7.77 over the past few years, with the highest turnover occurring in September 2022. A higher turnover indicates efficient management of inventory and potential cost savings.

2. Receivables Turnover: The receivables turnover ratio indicates how many times a company collects its accounts receivable during a period. Century Aluminum's receivables turnover varied from 15.42 to 82.70, with a significant increase in collection efficiency from December 2023 to March 2024. A higher ratio suggests effective credit and collection policies.

3. Payables Turnover: The payables turnover ratio shows how efficiently a company pays its suppliers. Century Aluminum's payables turnover fluctuated between 8.58 to 20.37, indicating changes in payment cycles. A higher turnover implies the company is managing its payables well and possibly benefiting from extended payment terms.

4. Working Capital Turnover: The working capital turnover ratio evaluates how efficiently a company utilizes its working capital to generate sales. Century Aluminum's working capital turnover varied significantly, from 5.91 to 652.68, showing fluctuations in working capital management over time. A higher ratio indicates effective utilization of working capital to drive revenue.

In conclusion, analyzing Century Aluminum's activity ratios provides insights into the company's operational efficiency, inventory management, receivables collection, payables practices, and utilization of working capital to generate sales. Monitoring these ratios can help identify trends, potential inefficiencies, and areas for improvement in managing the company's resources effectively.

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Average number of days

Century Aluminum Company's days of inventory on hand (DOH) has shown fluctuation over the years, ranging from a low of 46.98 days on September 30, 2022, to a high of 93.94 days on December 31, 2024. The decreasing trend from 2022 to 2023 was reversed in 2024, indicating a potential buildup of inventory that may need monitoring.

In terms of days of sales outstanding (DSO), the company has managed its collection efficiently, with a significant improvement from 23.67 days on June 30, 2024, to 14.62 days on December 31, 2024. This suggests an effective credit and collection policy in place.

The number of days of payables has been relatively stable, with minor fluctuations observed. From 2023 to 2024, there was a decrease in days of payables from 42.56 days on December 31, 2023, to 32.64 days on December 31, 2024. This indicates that the company has been managing its payment obligations effectively.

Overall, it is important for Century Aluminum Company to continuously monitor its activity ratios to ensure optimal inventory levels, efficient collections, and effective management of payables to support its financial health and operational efficiency.

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Long-term

The Fixed Asset Turnover ratio measures how efficiently a company is using its fixed assets to generate revenue. For Century Aluminum Company, we observe a steady decline in the Fixed Asset Turnover ratio from December 2019 to December 2022 ranging from 1.93 to 2.27. However, there is a significant spike in the ratio in March 2023, reaching 7.16, followed by fluctuations before stabilizing around 2.17 to 2.27 by the end of 2024. This indicates that from 2019 through 2022, the company's ability to generate revenue from its fixed assets was relatively stable before experiencing a sudden increase in 2023, suggesting improved asset utilization efficiency for a period.

On the other hand, the Total Asset Turnover ratio reflects how efficiently a company is utilizing all its assets to generate revenue. Century Aluminum Company's Total Asset Turnover ratio shows fluctuations over the years, with values ranging from 1.11 to 3.89. There is a general upward trend from December 2019 to December 2022, indicating an improvement in the company's overall asset utilization efficiency. However, by the end of 2023 and throughout 2024, the ratio decreases and stabilizes around 1.15 to 1.17, which suggests a decline in the company's ability to generate revenue from its total assets during that period.

In summary, while the Fixed Asset Turnover ratio for Century Aluminum Company exhibited volatility but generally improved in recent years, the Total Asset Turnover ratio displayed a more consistent upward trend before leveling off in the last few periods, indicating varied efficiency in utilizing all assets to generate revenue. Further analysis and comparison with industry peers would provide additional insights into the company's operational efficiency and performance.