Darling Ingredients Inc (DAR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 8.20 | 8.75 | 9.20 | 8.51 | 9.02 |
| Receivables turnover | 779.85 | 9.21 | 9.95 | 8.54 | 7.99 |
| Payables turnover | 14.62 | 12.48 | 13.70 | 13.53 | 13.68 |
| Working capital turnover | 7.63 | 11.23 | 13.91 | 11.22 | 14.30 |
Darling Ingredients Inc's inventory turnover has been gradually decreasing over the past five years, indicating that the company is taking longer to sell its inventory. This may suggest potential issues with managing inventory levels or changing demand patterns.
The receivables turnover ratio has been fluctuating significantly, with a particularly sharp increase in 2023. This may indicate improvements in the company's credit and collection policies, leading to quicker conversion of credit sales into cash.
The payables turnover ratio has been relatively stable over the years, showing that the company is maintaining consistent payment terms with its suppliers. A higher payables turnover ratio could suggest that Darling Ingredients Inc is efficient in managing its payables and potentially benefiting from longer payment terms.
The working capital turnover ratio has also shown fluctuations, with a noticeable decrease in 2023. This ratio indicates how efficiently the company is utilizing its working capital to generate sales. The decrease in 2023 may suggest a decline in operational efficiency or a change in the working capital management strategy.
Overall, Darling Ingredients Inc's activity ratios provide insights into the company's operational efficiency and effectiveness in managing its inventory, receivables, payables, and working capital. Further analysis and comparison with industry benchmarks would help in better understanding the company's financial performance.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 44.52 | 41.70 | 39.67 | 42.88 | 40.47 |
| Days of sales outstanding (DSO) | days | 0.47 | 39.65 | 36.69 | 42.72 | 45.66 |
| Number of days of payables | days | 24.97 | 29.25 | 26.63 | 26.97 | 26.68 |
Days of Inventory on Hand (DOH) measures how many days, on average, it takes for a company to sell its inventory. Darling Ingredients Inc's DOH fluctuated over the past five years, ranging from 39.67 days in 2021 to 44.52 days in 2023, indicating some variability in their inventory management efficiency.
Days of Sales Outstanding (DSO) represents how long it takes a company to collect its accounts receivable. In 2023, Darling Ingredients Inc's DSO significantly decreased to 0.47 days from 39.65 days in 2022, suggesting an improvement in their ability to collect revenue from customers promptly.
Number of Days of Payables shows the average number of days it takes for a company to pay its suppliers. Darling Ingredients Inc's payables period varied slightly over the years, with a decrease to 24.97 days in 2023 from 29.25 days in 2022, indicating that the company is taking slightly longer to pay its suppliers in the most recent year.
Overall, these activity ratios reflect a mixed performance for Darling Ingredients Inc in managing its inventory, collecting receivables, and paying its suppliers efficiently over the past five years. Further analysis and comparison with industry standards would provide more insights into the company's operational efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.23 | 2.60 | 2.54 | 1.88 | 1.82 |
| Total asset turnover | 0.59 | 0.70 | 0.76 | 0.62 | 0.61 |
Darling Ingredients Inc's long-term activity ratios, specifically fixed asset turnover and total asset turnover, provide insights into the efficiency with which the company utilizes its assets to generate revenue.
1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how effectively a company generates sales from its fixed assets.
- Darling Ingredients Inc's fixed asset turnover has experienced fluctuations over the past five years, with a decline from 2.60 in 2022 to 2.23 in 2023.
- A higher fixed asset turnover indicates better utilization of fixed assets to generate revenue, implying improved operational efficiency.
2. Total Asset Turnover:
- The total asset turnover ratio assesses the company's ability to generate sales relative to its total assets.
- Darling Ingredients Inc's total asset turnover has also shown variability, with a decrease from 0.70 in 2022 to 0.59 in 2023.
- A higher total asset turnover signifies efficient utilization of all assets to produce revenue, reflecting strong operational performance.
Overall, while Darling Ingredients Inc's long-term activity ratios exhibit some fluctuations, a generally decreasing trend in both fixed asset turnover and total asset turnover raises concerns about the company's efficiency in utilizing its assets to generate revenue. Management should closely monitor and assess the factors contributing to the changes in these ratios to enhance operational effectiveness and profitability in the long term.