Dow Inc (DOW)

Short-term

Turnover ratios

Based on the provided data for Dow Inc's activity ratios, we can analyze the following key ratios:

1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently a company manages its inventory. Dow Inc's inventory turnover has shown an increasing trend from 5.85 in 2020 to 6.18 in 2024, with a peak of 7.24 in 2022. This indicates that the company is effectively selling through its inventory, which is a positive sign for operational efficiency.

2. Receivables Turnover:
- The receivables turnover ratio evaluates how well a company collects payments from its customers. Dow Inc's receivables turnover has fluctuated over the years, ranging from 5.22 in 2020 to 7.34 in 2022. This indicates that the company has been successful in collecting payments, especially in 2022, which reflects efficient credit management.

3. Payables Turnover:
- The payables turnover ratio assesses how quickly a company pays its suppliers. Dow Inc's payables turnover has remained relatively stable over the years, with a range from 5.50 in 2021 to 7.01 in 2022. Consistent payables turnover suggests the company is managing its supplier payments effectively without any significant changes in the relationship.

4. Working Capital Turnover:
- The working capital turnover ratio measures how effectively a company utilizes its working capital to generate sales. Dow Inc's working capital turnover has shown fluctuations but generally improved from 4.83 in 2020 to 6.82 in 2024, with a peak of 7.21 in 2021. This indicates the company's ability to efficiently utilize its working capital to generate revenue.

Overall, the trend in Dow Inc's activity ratios shows improvements in inventory turnover, receivables turnover, and working capital turnover, reflecting strong operational efficiency and effective management of resources. Consistent payables turnover suggests stable relationships with suppliers. These ratios collectively indicate that Dow Inc is effectively managing its working capital and operations to drive sales and maintain financial health.

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Average number of days

Dow Inc's activity ratios provide insights into how efficiently the company manages its inventory, collects receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows a gradual decrease from 62.40 days in 2020 to 50.43 days in 2022 before slightly increasing to 59.02 days in 2024.
- A lower number of days indicates that the company is managing its inventory more efficiently by selling products quickly or maintaining lower inventory levels.

2. Days of Sales Outstanding (DSO):
- DSO demonstrates a decreasing trend from 69.98 days in 2020 to 49.74 days in 2022, indicating an improvement in the collection of receivables.
- However, there was a slight increase in 2023 and 2024 to 54.10 days and 58.31 days, respectively, which could potentially indicate challenges in receivables collection.

3. Number of Days of Payables:
- The number of days of payables ranged between 52.08 days and 66.34 days over the years, without a clear trend.
- A longer number of days of payables suggests that the company takes longer to pay its suppliers, potentially indicating an advantage in managing cash flow.

Overall, Dow Inc has shown mixed results in its activity ratios, with improvements in managing inventory and collecting receivables offset by variability in payables management. Further analysis may be needed to identify the underlying factors driving these trends.

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Long-term

The Fixed Asset Turnover ratio is used to measure a company's efficiency in generating sales revenue from its investments in fixed assets.

From the data provided, we can see that Dow Inc has shown an improving trend in its Fixed Asset Turnover ratio over the five-year period. The ratio has increased from 1.90 in 2020 to 2.78 in 2022 before slightly decreasing to 1.95 in 2024.

This indicates that the company is becoming more efficient in utilizing its fixed assets to generate sales. A higher Fixed Asset Turnover ratio implies better asset utilization and potentially lower asset underutilization.

Total Asset Turnover, on the other hand, measures a company's ability to generate sales from its total assets.

Dow Inc's Total Asset Turnover ratio has also shown an increasing trend from 0.63 in 2020 to 0.94 in 2022 before declining to 0.75 in 2024. This indicates that the company has been more effective in generating sales revenue relative to its total assets, which could be a positive sign of operational efficiency.

Overall, the upward trend in both Fixed Asset Turnover and Total Asset Turnover ratios suggests that Dow Inc has been better at efficiently utilizing its assets to generate sales revenue over the period, although there was a slight decline in 2024.