Compass Minerals International Inc (CMP)
Activity ratios
Short-term
Turnover ratios
| Sep 30, 2023 | Sep 30, 2022 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.47 | 0.66 | 0.46 | 0.66 | 0.74 |
| Receivables turnover | 8.92 | 7.18 | 5.11 | 4.11 | 4.61 |
| Payables turnover | 1.57 | 1.74 | 1.67 | 1.64 | 1.78 |
| Working capital turnover | 3.63 | 3.65 | 2.06 | 2.91 | 3.28 |
Activity ratios provide valuable insight into a company's efficiency in managing its resources. Let's analyze the activity ratios of Compass Minerals International Inc over the past five years.
The inventory turnover ratio measures how efficiently the company is managing its inventory. A decreasing trend in the inventory turnover ratio from 4.50 in 2018 to 2.48 in 2023 indicates a reduction in the speed at which inventory is being sold, potentially tying up more capital in inventory.
The receivables turnover ratio reflects how quickly the company collects its outstanding receivables. Compass Minerals International Inc has shown a positive trend in collecting receivables more efficiently, with the turnover ratio increasing from 4.79 in 2018 to 9.30 in 2023, indicating improved efficiency in collecting receivables.
The payables turnover ratio measures the speed at which a company pays its suppliers. A decreasing trend in the payables turnover ratio from 10.78 in 2018 to 8.31 in 2023 suggests that the company is taking more time to settle its payables, possibly indicating a shift in the payment strategy.
The working capital turnover ratio evaluates how effectively the company utilizes its working capital to generate sales. With a fluctuating trend, the working capital turnover ratio has shown some volatility over the years, indicating variations in the efficiency of utilizing working capital to support sales.
In conclusion, the trend in activity ratios for Compass Minerals International Inc suggests ongoing changes in efficiency in managing inventory, collecting receivables, settling payables, and utilizing working capital. These trends are valuable for understanding the company's operational efficiency and potential areas for improvement.
Average number of days
| Sep 30, 2023 | Sep 30, 2022 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 781.40 | 556.09 | 790.04 | 550.59 | 490.22 |
| Days of sales outstanding (DSO) | days | 40.92 | 50.85 | 71.37 | 88.71 | 79.15 |
| Number of days of payables | days | 232.71 | 209.54 | 218.47 | 223.07 | 204.66 |
Days of inventory on hand (DOH) measures how long it takes for a company to turn its inventory into sales. Compass Minerals International Inc's DOH has been increasing over the years, indicating that the company is taking longer to sell its inventory. This could suggest inefficiencies in inventory management or a decrease in demand for its products.
Days of sales outstanding (DSO) indicates the average number of days it takes for a company to collect revenue after making a sale. The decreasing trend in DSO for Compass Minerals International Inc suggests that the company has been able to collect its sales revenue more quickly, which is a positive sign for its liquidity and cash flow.
The number of days of payables measures the average number of days it takes for a company to pay its suppliers. Compass Minerals International Inc's payables period has been increasing, which may indicate that the company is taking longer to pay its suppliers. This could potentially strain supplier relationships if not managed effectively.
Overall, Compass Minerals International Inc's activity ratios indicate potential inefficiencies in managing its inventory, improving collection of sales revenue, and managing its payables. It may be important for the company to focus on optimizing inventory levels, improving collection processes, and effectively managing payables to enhance its overall operational efficiency.
Long-term
| Sep 30, 2023 | Sep 30, 2022 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 1.37 | 1.55 | 1.12 | 1.37 | 1.37 |
| Total asset turnover | 0.64 | 0.73 | 0.42 | 0.58 | 0.61 |
The long-term activity ratios of Compass Minerals International Inc provide insight into the company's efficiency in managing its fixed and total assets to generate sales. The fixed asset turnover ratio indicates a declining trend from 1.60 in 2022 to 1.41 in 2023, suggesting a reduction in the company's ability to generate sales from its fixed assets. Similarly, the total asset turnover ratio also shows a decreasing trend, decreasing from 0.76 in 2022 to 0.66 in 2023, indicating a decrease in the company's ability to generate sales from its total assets. Both ratios suggest a decreasing trend in asset utilization efficiency, which may warrant a closer examination of the company's asset management strategies.