Clearwater Paper Corporation (CLW)

Short-term

Turnover ratios

Activity ratios provide insight into how efficiently a company is managing its resources and assets to generate sales and profits. Let's analyze Clearwater Paper Corp's activity ratios over the past five years.

1. Inventory turnover:
Clearwater Paper Corp's inventory turnover has been relatively stable over the past five years, ranging from 5.48 to 5.98. This indicates that, on average, the company is able to sell and replace its inventory approximately 5 to 6 times a year. A high inventory turnover ratio suggests effective inventory management and quick sales of goods.

2. Receivables turnover:
The company's receivables turnover has also shown consistency, with values ranging from 10.59 to 11.64 over the period. This implies that Clearwater Paper Corp collects its accounts receivable approximately 11 times a year on average. A high receivables turnover ratio indicates efficient credit management and timely collection of payments from customers.

3. Payables turnover:
The payables turnover ratio for Clearwater Paper Corp has varied significantly, from 8.56 to 10.98. This ratio reflects how quickly the company is able to pay off its suppliers. A higher payables turnover ratio suggests that the company is effectively managing its payables and settling its obligations promptly.

4. Working capital turnover:
The working capital turnover ratio has shown a declining trend over the five years, dropping from 9.50 to 7.49. This ratio indicates how effectively the company is using its working capital to generate sales. A decreasing trend may suggest that Clearwater Paper Corp is becoming less efficient in utilizing its working capital to drive revenue growth.

In summary, Clearwater Paper Corp has demonstrated stable inventory and receivables turnover ratios, indicating efficient management of inventory and receivables. However, the fluctuating payables turnover ratio and declining working capital turnover ratio may require further analysis to understand the company's cash flow and operational efficiency.

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Average number of days

Clearwater Paper Corp's activity ratios show the efficiency of the company in managing its inventory, receivables, and payables over the past five years.

1. Days of Inventory on Hand (DOH): The trend in the DOH ratio indicates how many days it takes for Clearwater Paper Corp to sell its inventory. The increase in DOH from 61.07 days in 2020 to 66.62 days in 2023 may indicate that the company is holding onto inventory for a longer period, which could tie up working capital.

2. Days of Sales Outstanding (DSO): The DSO ratio reflects the average number of days it takes for Clearwater Paper Corp to collect its accounts receivable. The decrease in DSO from 33.03 days in 2019 to 32.30 days in 2023 suggests that the company has been more efficient in collecting receivables over the years.

3. Number of Days of Payables: This ratio represents the average number of days Clearwater Paper Corp takes to pay its suppliers. The fluctuation in the number of days of payables from 33.25 days in 2020 to 42.64 days in 2022 and then back to 34.15 days in 2023 signifies the company's changing relationship with its suppliers in terms of payment terms.

Overall, Clearwater Paper Corp's activity ratios indicate a mixed efficiency in managing its working capital components. The company should continue to focus on optimizing inventory levels, accelerating collections from customers, and managing payables effectively to enhance overall operational efficiency and cash flow management.

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Long-term

Clearwater Paper Corp's long-term activity ratios reflect its efficiency in utilizing fixed assets and total assets to generate sales revenue. The fixed asset turnover ratio has shown a positive trend over the past five years, increasing from 1.40 in 2019 to 2.10 in 2023. This indicates that the company is generating more sales revenue for each dollar invested in fixed assets, showcasing improved efficiency in utilizing its long-term capital expenditures.

Similarly, the total asset turnover ratio has also displayed a positive trajectory, rising from 0.94 in 2019 to 1.25 in 2023. This suggests that Clearwater Paper Corp is effectively utilizing its total assets to generate sales, indicating improving operational efficiency and asset utilization.

Overall, the upward trend in both fixed asset turnover and total asset turnover ratios signifies Clearwater Paper Corp's ability to efficiently manage its long-term assets to drive sales growth and enhance profitability. This could indicate effective operational strategies, prudent investment decisions, and effective capital utilization by the company over the years.