Clean Harbors Inc (CLH)

Short-term

Turnover ratios

The activity ratios of Clean Harbors, Inc. provide insights into the efficiency of the company's operations in managing its inventory, receivables, payables, and working capital.

1. Inventory turnover:
Clean Harbors, Inc. has shown a consistent improvement in inventory turnover over the past five years, indicating that the company is efficiently managing its inventory levels. The inventory turnover ratio has increased from 9.70 in 2020 to 11.44 in 2023, with higher ratios suggesting that Clean Harbors is selling and replenishing its inventory more frequently.

2. Receivables turnover:
The receivables turnover ratio measures how quickly the company collects payments from its customers. Clean Harbors, Inc. has maintained a relatively stable receivables turnover ratio over the past five years, ranging from 4.29 in 2021 to 4.96 in 2023. This indicates that the company has been effective in collecting payments from customers in a timely manner.

3. Payables turnover:
The payables turnover ratio reflects how efficiently Clean Harbors, Inc. is managing its accounts payable by indicating how quickly the company pays its suppliers. The payables turnover ratio has fluctuated over the years, reaching a peak of 10.91 in 2020 and then decreasing to 8.29 in 2023. A higher ratio suggests that the company is paying its suppliers more frequently.

4. Working capital turnover:
The working capital turnover ratio assesses the efficiency of Clean Harbors, Inc. in generating revenue relative to its working capital. The company has shown improvement in this ratio over the years, with the ratio increasing from 3.53 in 2020 to 5.33 in 2023. A higher working capital turnover ratio indicates that the company is generating more revenue for each dollar of working capital invested.

Overall, the activity ratios of Clean Harbors, Inc. demonstrate that the company has been effectively managing its operations to improve efficiency in inventory management, receivables collection, payables handling, and working capital utilization over the analyzed period.

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Average number of days

The activity ratios for Clean Harbors, Inc. provide insights into the efficiency of the company's inventory management, accounts receivable collection, and accounts payable turnover over the past five years.

1. Days of Inventory on Hand (DOH):
- The trend of the DOH ratio has been fluctuating over the years, ranging from 31.91 days in 2023 to 37.65 days in 2020.
- A lower number of days of inventory on hand indicates that the company is efficiently managing its inventory, while a higher number suggests that inventory turnover is slower.
- Clean Harbors has been able to reduce its DOH from 37.65 days in 2020 to 31.91 days in 2023, indicating improvements in inventory management efficiency.

2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects the average number of days it takes for the company to collect payment after making a sale.
- Clean Harbors' DSO has shown some variability, with the lowest at 73.62 days in 2023 and the highest at 85.14 days in 2021.
- A lower DSO indicates more efficient accounts receivable management, while a higher DSO suggests delays in collecting payments from customers.

3. Number of Days of Payables:
- The days of payables ratio represents the average number of days the company takes to pay its suppliers.
- Clean Harbors' days of payables have also fluctuated over the years, with the highest at 50.33 days in 2021 and the lowest at 33.44 days in 2020.
- A longer number of days of payables suggests that the company is taking longer to pay its suppliers, possibly indicating better cash flow management.

In summary, Clean Harbors has shown improvements in inventory management efficiency, slight fluctuations in accounts receivable collection periods, and varying trends in accounts payable turnover over the past five years. The company's ability to effectively manage its working capital and optimize its operating cycle will have implications for its overall financial health and performance.

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Long-term

Clean Harbors, Inc. has shown varying trends in its long-term activity ratios over the past five years. The fixed asset turnover ratio, which indicates how efficiently the company is utilizing its fixed assets to generate revenue, has been somewhat fluctuating but generally improving. The ratio decreased from 2.15 in 2019 to 2.04 in 2021, indicating a slight decrease in efficiency, but it has since improved to 2.47 in 2023.

On the other hand, the total asset turnover ratio, which measures the company's ability to generate sales from its total assets, has shown a mixed trend. The ratio increased from 0.83 in 2019 to 0.76 in 2020, which suggests a decline in efficiency. However, it improved thereafter, reaching 0.85 in 2023, indicating that the company is generating more sales relative to its total assets.

Overall, while Clean Harbors, Inc. has seen improvements in its fixed asset turnover ratio, the trends in the total asset turnover ratio have been more varied. It is essential for the company to continue monitoring and optimizing its asset utilization to ensure sustained efficiency and profitability in the long term.