Clean Harbors Inc (CLH)

Short-term

Turnover ratios

The following is an analysis of Clean Harbors Inc's activity ratios based on the provided data:

1. Inventory Turnover:
- The inventory turnover for Clean Harbors Inc has shown a general decreasing trend over the years, indicating that the company is taking longer to sell its inventory.
- There was a noticeable decline in inventory turnover from December 31, 2020, to March 31, 2021, after which it stabilized at around 12 to 14 times per year.
- A higher inventory turnover ratio is generally preferred as it signifies efficient management of inventory levels.

2. Receivables Turnover:
- The receivables turnover ratio for Clean Harbors Inc has shown fluctuations but generally remained within a range over the years.
- The ratio peaked at 5.80 on June 30, 2020, and demonstrated a slight decline before slightly increasing to 5.67 by December 31, 2024.
- A higher receivables turnover ratio suggests that the company efficiently collects payments from its customers.

3. Payables Turnover:
- The payables turnover ratio for Clean Harbors Inc fluctuated over the years but showed a decreasing trend from March 31, 2020, to December 31, 2024.
- The company's ability to pay off its suppliers appears to have weakened as the payables turnover ratio declined.
- A higher payables turnover ratio is preferred as it indicates that the company is managing its payables efficiently.

4. Working Capital Turnover:
- The working capital turnover ratio initially decreased from March 31, 2020, to December 31, 2020, before increasing substantially by December 31, 2021.
- The ratio remained relatively stable around 4.68 to 5.71 times per year from March 31, 2023, to June 30, 2024.
- A higher working capital turnover ratio signifies that the company efficiently utilizes its working capital to generate revenue.

In summary, Clean Harbors Inc's activity ratios provide insights into its efficiency in managing inventory, receivables, payables, and working capital. While the trends in these ratios have varied over the years, maintaining high turnover ratios is crucial for optimizing the company's operational performance. Further analysis and comparison with industry benchmarks can help evaluate the company's performance in these key areas.

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Average number of days

Clean Harbors Inc's activity ratios provide insight into how efficiently the company manages its assets and operations.

1. Days of Inventory on Hand (DOH): This ratio measures how many days it takes for the company to sell its inventory. The trend for Clean Harbors Inc's DOH has been fluctuating, ranging from a low of 11.12 days to a high of 31.08 days over the past few years. The decreasing trend in recent periods indicates that the company is managing its inventory more efficiently, with inventory turnover improving.

2. Days of Sales Outstanding (DSO): DSO reflects the average number of days it takes for the company to collect its accounts receivable. Clean Harbors Inc's DSO has varied but generally has been in the range of 60-80 days. The decreasing trend in recent periods indicates that the company is improving its collection process, converting sales into cash more efficiently.

3. Number of Days of Payables: This ratio represents the average number of days the company takes to pay its suppliers. Clean Harbors Inc's payables days have been relatively stable, ranging from around 25 to 41 days. A longer payment period may indicate favorable terms with suppliers, but it's essential to monitor to ensure it doesn't strain relationships.

In summary, Clean Harbors Inc has shown improvement in inventory management and accounts receivable collection efficiency in recent periods, which is a positive sign for the company's overall operational effectiveness. Keeping payables days relatively stable reflects the company's ability to maintain relationships with suppliers while managing cash flow effectively.

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Long-term

Clean Harbors Inc's fixed asset turnover ratio has been consistently increasing over the past few years, indicating that the company is generating more revenue per dollar of fixed assets. This suggests that Clean Harbors has been effectively utilizing its fixed assets to generate sales.

On the other hand, Clean Harbors' total asset turnover ratio has been fluctuating slightly, but generally has remained relatively stable over the same period. The ratio indicates the company's ability to generate sales from its total assets, both fixed and current. A stable total asset turnover ratio suggests that Clean Harbors is efficiently using its total assets to generate revenue.

Overall, the increasing trend in fixed asset turnover combined with the stable total asset turnover indicates that Clean Harbors is managing its assets effectively to drive sales growth and improve operational efficiency over time.