CF Industries Holdings Inc (CF)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 13.67 | 13.74 | 15.29 | 12.33 | 11.23 | 10.72 | 9.81 | 9.35 | 10.17 | 8.82 | 12.17 | 8.75 | 11.58 | 10.82 | 11.97 | 8.98 | 9.73 | 11.77 | 12.21 | 7.91 |
| Receivables turnover | 13.13 | 18.39 | 22.46 | 21.43 | 19.22 | 15.42 | 14.03 | 12.31 | 13.15 | 13.21 | 11.43 | 15.50 | 15.56 | 17.40 | 17.05 | 18.17 | 18.97 | 15.03 | 14.94 | 16.94 |
| Payables turnover | 35.84 | — | — | — | 84.52 | — | — | — | 37.74 | — | — | — | 39.09 | — | — | — | 43.79 | — | — | — |
| Working capital turnover | 2.95 | 2.35 | 2.53 | 3.46 | 4.18 | 4.84 | 3.85 | 5.23 | 5.63 | 6.38 | 4.95 | 7.03 | 8.95 | 8.31 | 8.18 | 18.61 | 14.85 | 11.02 | 10.48 | 7.63 |
CF Industries Holdings Inc's activity ratios demonstrate a relatively high efficiency in managing its inventory and receivables. The inventory turnover ratio has been consistently strong, averaging around 13-15 times per year, indicating the company is successfully moving its inventory. The relatively steady performance in this ratio suggests effective inventory management practices.
On the receivables side, the company has shown a strong ability to collect outstanding payments, with the receivables turnover ratio averaging between 13-22 times per year. This indicates that CF Industries is efficient in converting its credit sales into cash, which is a positive sign of liquidity and effective credit management.
The payables turnover ratio has displayed some volatility, with data missing for certain quarters; however, the available figures indicate that the company is relatively efficient in paying its creditors. A lower payables turnover ratio might suggest that the company is taking longer to pay its suppliers, potentially indicating favorable credit terms.
The working capital turnover ratio has shown some variability, with figures ranging from 2.35 to 5.23. Generally, a higher ratio signifies that the company is effectively using its working capital to generate sales. CF Industries has demonstrated a good level of efficiency in utilizing its working capital to drive revenue production, although there have been fluctuations in this measure over the quarters.
Overall, the activity ratios of CF Industries Holdings Inc indicate strong operational efficiency in managing inventory, receivables, payables, and working capital, which is essential for sustaining a healthy financial position and supporting ongoing business operations.
Average number of days
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 26.71 | 26.57 | 23.87 | 29.59 | 32.49 | 34.06 | 37.21 | 39.04 | 35.88 | 41.37 | 29.99 | 41.73 | 31.52 | 33.75 | 30.48 | 40.66 | 37.50 | 31.01 | 29.89 | 46.17 |
| Days of sales outstanding (DSO) | days | 27.80 | 19.85 | 16.25 | 17.03 | 18.99 | 23.67 | 26.01 | 29.65 | 27.75 | 27.63 | 31.92 | 23.55 | 23.45 | 20.98 | 21.41 | 20.09 | 19.24 | 24.29 | 24.44 | 21.54 |
| Number of days of payables | days | 10.18 | — | — | — | 4.32 | — | — | — | 9.67 | — | — | — | 9.34 | — | — | — | 8.33 | — | — | — |
CF Industries Holdings Inc's activity ratios indicate how efficiently the company manages its inventory, accounts receivable, and accounts payable.
1. Days of Inventory on Hand (DOH):
The trend of DOH shows a fluctuating pattern over the last eight quarters, with the most recent quarter showing 26.71 days. The company has relatively consistent days of inventory on hand, ranging from around 23.87 days to 39.04 days. A lower number of days of inventory on hand indicates that the company is managing its inventory efficiently and turning it over quickly.
2. Days of Sales Outstanding (DSO):
The Days of Sales Outstanding has varied over the quarters, from a low of 16.25 days to a high of 29.65 days. In the most recent quarter, DSO stands at 27.80 days, which indicates customers take almost a month on average to pay their bills. A lower DSO is generally favorable as it shows quicker collection of receivables and better cash flow management.
3. Number of Days of Payables:
The data for days of payables is incomplete, with information not available for a few quarters. However, the trend from available data shows a decrease in the number of days of payables, which means the company is taking longer to pay its suppliers. This can be a strategy to manage cash flow or negotiate better payment terms with vendors.
Overall, the company should aim to optimize its inventory levels, reduce DSO, and efficiently manage its payables to improve liquidity and working capital efficiency. To gain deeper insights, it would be useful to compare these ratios with industry averages and the company's historical performance.
Long-term
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed asset turnover | 0.93 | 1.25 | 1.40 | 1.64 | 1.74 | 1.71 | 1.53 | 1.21 | 0.92 | 0.71 | 0.62 | 0.56 | 0.54 | 0.53 | 0.55 | 0.57 | 0.56 | 0.57 | 0.56 | 0.53 |
| Total asset turnover | 0.46 | 0.57 | 0.64 | 0.77 | 0.84 | 0.84 | 0.76 | 0.61 | 0.53 | 0.43 | 0.38 | 0.35 | 0.34 | 0.34 | 0.36 | 0.37 | 0.38 | 0.36 | 0.36 | 0.35 |
CF Industries Holdings Inc's fixed asset turnover ratio has been decreasing over the quarters, indicating that the company is generating less revenue relative to its investment in fixed assets. This could imply inefficiency in utilizing its fixed assets to generate sales in recent periods.
On the other hand, the total asset turnover ratio is also declining over the quarters, suggesting that CF Industries is becoming less efficient in generating sales compared to its total assets. This trend may indicate a decrease in overall operational efficiency or a lower level of asset utilization in the business.
The declining trend in both fixed asset turnover and total asset turnover ratios signals a potential area of concern for CF Industries, as it may reflect a decrease in operational efficiency and asset utilization, which could impact the company's profitability and overall financial performance in the long term. Further analysis and investigation into the drivers of these trends are advised to identify potential areas for improvement.