CF Industries Holdings Inc (CF)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 13.67 | 11.23 | 10.17 | 11.58 | 9.73 |
| Receivables turnover | 13.13 | 19.22 | 13.15 | 15.56 | 18.97 |
| Payables turnover | 35.84 | 84.52 | 37.74 | 39.09 | 43.79 |
| Working capital turnover | 2.95 | 4.18 | 5.63 | 8.95 | 14.85 |
Based on the activity ratios of CF Industries Holdings Inc over the past five years, there are several insights that can be drawn.
1. Inventory Turnover: The inventory turnover ratio measures how efficiently the company is managing its inventory. CF Industries' inventory turnover has been consistently increasing over the past five years, indicating that the company is selling its inventory more quickly. This is a positive sign as it suggests strong demand for the company's products.
2. Receivables Turnover: The receivables turnover ratio reflects how efficiently the company is collecting payments from its customers. CF Industries' receivables turnover has fluctuated over the years but has generally remained at healthy levels. A higher turnover ratio implies that the company is efficiently collecting payments from its customers.
3. Payables Turnover: The payables turnover ratio measures how quickly the company is paying its suppliers. CF Industries' payables turnover has also fluctuated over the years but has generally decreased, indicating that the company is taking longer to pay its suppliers. While this may suggest a potential strain on supplier relationships, it could also indicate improved cash flow management.
4. Working Capital Turnover: The working capital turnover ratio indicates how effectively the company is utilizing its working capital to generate sales. CF Industries' working capital turnover has been declining steadily over the past five years. A decreasing trend in this ratio may indicate that the company is becoming less efficient in utilizing its working capital to generate revenue.
In summary, CF Industries' activity ratios suggest improving inventory turnover and receivables turnover, but a declining trend in payables turnover and working capital turnover. This indicates a mixed picture of the company's management of inventory, receivables, payables, and working capital over the years.
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 | 26.71 | 32.49 | 35.88 | 31.52 | 37.50 |
| Days of sales outstanding (DSO) | days | 27.80 | 18.99 | 27.75 | 23.45 | 19.24 |
| Number of days of payables | days | 10.18 | 4.32 | 9.67 | 9.34 | 8.33 |
Days of inventory on hand (DOH) measures how many days, on average, inventory is held before being sold. A lower DOH indicates faster inventory turnover. CF Industries Holdings Inc has shown an improving trend in inventory management over the last five years, with DOH decreasing from 37.50 days in 2019 to 26.71 days in 2023, indicating better efficiency in managing inventory levels.
Days of sales outstanding (DSO) represents the average number of days it takes for the company to collect payment after making a sale. A lower DSO indicates better receivables management. CF Industries Holdings Inc experienced some fluctuation in DSO over the years, but it has generally improved, with DSO decreasing from 19.24 days in 2019 to 27.80 days in 2023. This suggests the company has been more effective in collecting payments from customers.
Number of days of payables reflects the average number of days the company takes to pay its suppliers. A higher number of days of payables implies the company takes longer to settle its payables. CF Industries Holdings Inc has seen an increase in the number of days of payables from 8.33 days in 2019 to 10.18 days in 2023. This may indicate that the company is taking longer to pay its suppliers, potentially impacting supplier relationships.
In conclusion, CF Industries Holdings Inc has shown improvement in inventory turnover and receivables management over the years, leading to increased efficiency in its operations. However, the increase in the number of days of payables suggests a potential area for further analysis to understand the company's working capital management strategies.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.93 | 1.74 | 0.92 | 0.54 | 0.56 |
| Total asset turnover | 0.46 | 0.84 | 0.53 | 0.34 | 0.38 |
The long-term activity ratios for CF Industries Holdings Inc indicate how effectively the company is utilizing its assets to generate sales over a period of five years.
1. Fixed Asset Turnover:
- Fixed asset turnover has shown fluctuation over the years, with a significant decline from 1.74 in 2022 to 0.93 in 2023. This ratio measures how efficiently the company is generating revenue from its fixed assets. The decrease in 2023 suggests a reduced ability to generate sales relative to the investment in fixed assets. However, the ratio remains above 1.0 in most years, indicating the company is generally able to efficiently utilize its fixed assets to generate revenue.
2. Total Asset Turnover:
- Total asset turnover, which indicates how efficiently the company is generating sales from all of its assets, also demonstrates fluctuation over the years. There was a notable increase in 2023 compared to the previous years. The ratio has generally been below 1.0, indicating that the company is not generating a high level of sales relative to its total assets. However, the improving trend over the years suggests that the company is becoming more efficient in utilizing its total assets to drive revenue.
In conclusion, while CF Industries Holdings Inc has experienced fluctuations in its long-term activity ratios, there are indications of improvement in asset turnover efficiency, particularly in total asset turnover in recent years. Monitoring these ratios will be essential for assessing the company's ability to optimize its asset utilization and improve operational performance.