Cleveland-Cliffs Inc (CLF)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company is managing its resources and generating revenue. Let's analyze the activity ratios of Cleveland-Cliffs Inc based on the provided data:

1. Inventory Turnover:
- Cleveland-Cliffs Inc's inventory turnover has been steadily increasing from Q1 2022 to Q4 2023, indicating that the company is selling its inventory more frequently. This suggests effective inventory management and efficient sales operations.

2. Receivables Turnover:
- The receivables turnover has fluctuated over the quarters but generally shows a stable trend. A higher receivables turnover ratio indicates that the company is able to collect its receivables quickly. Cleveland-Cliffs Inc has shown a consistent ability to convert its credit sales into cash, which is a positive sign for liquidity management.

3. Payables Turnover:
- The payables turnover ratio has also demonstrated relatively stable performance over the quarters. A higher payables turnover suggests that the company is paying off its suppliers quickly. The consistency in this ratio indicates effective management of payables and relationships with suppliers.

4. Working Capital Turnover:
- The working capital turnover has shown an increasing trend over the quarters, indicating that Cleveland-Cliffs Inc is generating more revenue for each unit of working capital employed. This signifies efficient utilization of working capital to drive sales and operations.

Overall, the activity ratios of Cleveland-Cliffs Inc reflect a generally positive picture of operational efficiency and effective management of inventory, receivables, payables, and working capital. The increasing trends in inventory turnover and working capital turnover, along with stable receivables and payables turnover, indicate that the company is effectively managing its resources to drive revenue generation.

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Average number of days

Activity ratios provide insight into how efficiently a company manages its assets and operations. Let's analyze the activity ratios of Cleveland-Cliffs Inc based on the provided data:

Days of Inventory on Hand (DOH):
- The trend for DOH shows a decreasing pattern over the past eight quarters, indicating that the company has been able to reduce the number of days it takes to convert inventory into sales. This suggests efficient inventory management and may free up working capital for other uses.

Days of Sales Outstanding (DSO):
- DSO has shown some fluctuations over the quarters but generally remained within a relatively stable range. A decreasing DSO implies that the company is collecting its accounts receivable more quickly, improving cash flow and liquidity. However, a higher DSO in some quarters may indicate potential issues with credit policies or customer payments.

Number of Days of Payables:
- The number of days of payables has also varied but has mostly stayed consistent over the quarters. A longer payable period can indicate that the company is taking advantage of trade credit terms or negotiating favorable payment terms with suppliers, which can benefit cash flow management. Conversely, an excessively long payable period may strain supplier relationships.

Overall, these activity ratios suggest that Cleveland-Cliffs Inc has been effectively managing its operational efficiency in terms of inventory, accounts receivable, and accounts payable. The decreasing trend in DOH and stable DSO and payables days indicate a balance in managing working capital and optimizing cash flow. However, periodic fluctuations in these ratios may warrant further investigation to ensure sustained efficiency in the company's operations.

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Long-term

The fixed asset turnover ratio for Cleveland-Cliffs Inc has been relatively stable and high, averaging around 2.50 over the past eight quarters. This indicates that the company generates $2.50 in sales for every dollar invested in fixed assets. The consistent level suggests efficient utilization of fixed assets to generate revenue.

On the other hand, the total asset turnover ratio has shown some fluctuations, ranging from 1.13 to 1.25 over the same period. The average total asset turnover is around 1.20, indicating that the company generates $1.20 in sales for every dollar invested in total assets. This ratio is crucial as it reflects the company's overall efficiency in generating sales from all assets, both fixed and current.

Overall, an analysis of Cleveland-Cliffs Inc's long-term activity ratios suggests that the company is effectively utilizing its fixed assets to generate sales, while the total asset turnover ratio reflects varying efficiency levels in utilizing all assets to generate revenue. The trend in these ratios over time can provide insights into the company's operational performance and asset utilization efficiency.