Cleveland-Cliffs Inc (CLF)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.91 | 4.81 | 4.12 | 3.18 | 1.44 |
| Receivables turnover | 12.17 | 11.95 | 11.73 | 9.48 | 4.49 |
| Payables turnover | 9.91 | 10.22 | 9.66 | 7.95 | 3.50 |
| Working capital turnover | 5.35 | 7.03 | 5.94 | 5.00 | 2.26 |
Cleveland-Cliffs Inc's inventory turnover ratio has shown an increasing trend over the years, from 1.44 in 2020 to 3.91 in 2024. This indicates that the company is managing its inventory more efficiently, with goods being sold and replaced at a faster rate.
The receivables turnover ratio has also been consistently increasing, from 4.49 in 2020 to 12.17 in 2024. This indicates that Cleveland-Cliffs is collecting its accounts receivable more quickly, which is a positive sign of effective credit management.
On the payables side, the payables turnover ratio has shown a steady increase from 3.50 in 2020 to 9.91 in 2024. This suggests that the company is improving its ability to pay its suppliers promptly, potentially benefiting from favorable credit terms.
The working capital turnover ratio has shown variability over the years, with a peak in 2023 at 7.03. This ratio reflects how efficiently the company is utilizing its working capital to generate sales. While there was a dip in 2024 to 5.35, the overall trend indicates an improvement in working capital efficiency.
Overall, the upward trends in these activity ratios suggest that Cleveland-Cliffs Inc has been enhancing its operational efficiency and effectiveness in managing its resources over the years.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 93.46 | 75.89 | 88.70 | 114.95 | 253.53 |
| Days of sales outstanding (DSO) | days | 29.98 | 30.53 | 31.12 | 38.51 | 81.33 |
| Number of days of payables | days | 36.84 | 35.72 | 37.79 | 45.93 | 104.31 |
Cleveland-Cliffs Inc's activity ratios show the efficiency of the company in managing its inventory, sales, and payables over the years.
1. Days of Inventory on Hand (DOH):
- The company's DOH has improved significantly from 253.53 days in 2020 to 93.46 days in 2024. This indicates that Cleveland-Cliffs has been able to reduce the number of days it takes to sell its inventory.
- The decreasing trend in DOH suggests effective inventory management, which could lead to lower carrying costs and potential for increased liquidity.
2. Days of Sales Outstanding (DSO):
- DSO has also shown a decreasing trend from 81.33 days in 2020 to 29.98 days in 2024. This indicates that the company has been able to collect its accounts receivable faster.
- A lower DSO implies that the company is efficient in collecting payments from its customers, which in turn improves cash flow and liquidity.
3. Number of Days of Payables:
- The number of days of payables has decreased from 104.31 days in 2020 to 36.84 days in 2024. This indicates that Cleveland-Cliffs is taking longer to pay its suppliers.
- A decreasing trend in the payables period could indicate potential negotiation power with suppliers but may also hint at a shorter credit period available, impacting cash flow and working capital management.
Overall, the improving trends in all three activity ratios suggest that Cleveland-Cliffs Inc has been effectively managing its working capital and operational efficiencies over the years. This efficiency could lead to improved financial performance and better cash flow management for the company.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 1.93 | 2.47 | 2.53 | 2.23 | 0.61 |
| Total asset turnover | 0.92 | 1.25 | 1.23 | 1.08 | 0.32 |
Based on the provided data, Cleveland-Cliffs Inc's long-term activity ratios show a significant improvement in efficiency over the years.
1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how efficiently the company generates revenue from its investments in fixed assets.
- In 2020, the ratio was low at 0.61, indicating that the company was not effectively utilizing its fixed assets to generate revenue.
- However, there has been a substantial improvement in subsequent years, with the ratio increasing to 2.23 in 2021, 2.53 in 2022, and 2.47 in 2023, before slightly decreasing to 1.93 in 2024.
- The consistent increase in the fixed asset turnover ratio indicates that Cleveland-Cliffs Inc has been more efficient in generating revenue from its fixed assets.
2. Total Asset Turnover:
- The total asset turnover ratio measures how efficiently the company is utilizing all its assets to generate revenue.
- In 2020, the ratio was relatively low at 0.32, indicating that the company was not efficiently using its total assets to generate sales.
- Subsequently, there was a notable improvement in the total asset turnover ratio, increasing to 1.08 in 2021, 1.23 in 2022, and 1.25 in 2023, before declining slightly to 0.92 in 2024.
- The increase in the total asset turnover ratio signifies that Cleveland-Cliffs Inc has been more effective in generating revenue from its total assets, reflecting improved efficiency in asset utilization.
In conclusion, Cleveland-Cliffs Inc's long-term activity ratios suggest a positive trend of enhanced efficiency in utilizing both fixed and total assets to generate revenue over the years, which is a favorable indication of the company's operational performance.