Clean Harbors Inc (CLH)

Short-term

Turnover ratios

Clean Harbors Inc has shown consistent improvement in its inventory turnover ratio from 11.96 in 2020 to 12.73 in 2021 and 13.03 in 2022, indicating efficient management of inventory. However, there was a slight dip to 12.73 in 2024, which could suggest a potential issue with inventory management efficiency.

The receivables turnover ratio has fluctuated over the years, with a decrease from 5.13 in 2020 to 4.80 in 2021, but then showing an upward trend to 5.67 in 2024. A higher turnover ratio implies the company is collecting its receivables more quickly.

In terms of payables turnover, Clean Harbors Inc has seen a significant decrease in the ratio from 13.46 in 2020 to 8.87 in 2021, possibly indicating a longer payment cycle. However, there has been a gradual improvement in this ratio from 2021 to 2024, reaching 10.05, which could suggest better management of payables.

The working capital turnover ratio has generally been increasing over the years, indicating that the company is efficiently using its working capital to generate sales. The ratio increased from 3.53 in 2020 to 5.32 in 2023 before decreasing slightly to 4.32 in 2024.

Overall, the analysis of Clean Harbors Inc's activity ratios highlights improvements in inventory turnover and working capital turnover, while also showing some fluctuations in receivables and payables turnover ratios, which could warrant further investigation into the company's management of these areas.

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Average number of days

Analyzing the activity ratios of Clean Harbors Inc based on the provided data:

1. Days of Inventory on Hand (DOH):
- The DOH shows how many days the company takes, on average, to sell its inventory. A lower DOH is generally preferable as it indicates faster turnover.
- Clean Harbors Inc has shown a consistent decrease in DOH over the years, from 30.53 days in 2020 to 28.68 days in 2024. This signifies improved efficiency in managing inventory.

2. Days of Sales Outstanding (DSO):
- DSO represents the average number of days it takes for the company to collect payment after making a sale. A lower DSO is preferred as it indicates faster cash conversion.
- Clean Harbors Inc has demonstrated a decreasing trend in DSO from 71.10 days in 2020 to 64.40 days in 2024. This implies enhanced collection efficiency.

3. Number of Days of Payables:
- This metric indicates the average number of days it takes for the company to pay its suppliers. A higher number may suggest that the company is managing its payables effectively.
- Clean Harbors Inc experienced an increase in the number of days of payables from 27.12 days in 2020 to 36.33 days in 2024. This might indicate a deliberate strategy to manage cash flow and maintain good supplier relationships.

In summary, the trends observed in Clean Harbors Inc's activity ratios suggest improvements in inventory management, receivables collection, and payables strategy over the years, contributing to better operational efficiency and financial performance.

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Long-term

Clean Harbors Inc's fixed asset turnover ratio shows a stable trend over the years, ranging between 2.13 and 2.74. This indicates that the company is generating revenue efficiently from its investment in fixed assets.

However, their total asset turnover ratio fluctuates more, though it generally stays within a narrow range of 0.67 to 0.85. This suggests that Clean Harbors may not be as effective in generating sales from all of its assets.

Overall, the company seems to be managing its fixed assets well in generating revenue, but there may be areas for improvement in optimizing the utilization of its total assets to drive sales.