Eastman Chemical Company (EMN)

Short-term

Turnover ratios

The analysis of Eastman Chemical Company's activity ratios reveals interesting trends.

1. Inventory Turnover:
- The inventory turnover ratio has shown a fluctuating trend over the years, declining from 5.30 in 2021 to 3.57 in 2024. This signifies that the company is taking longer to sell its inventory, which could indicate issues with demand, production, or inventory management.

2. Receivables Turnover:
- The receivables turnover information is not available for the years provided. This lack of data restricts our ability to analyze the efficiency of the company in collecting receivables from customers.

3. Payables Turnover:
- Similarly, the payables turnover data is unavailable, limiting our insight into how efficiently Eastman Chemical is managing its payables and vendor payments.

4. Working Capital Turnover:
- The working capital turnover ratio has varied significantly, with a notable surge in 2022 to 20.08, indicating that the company generated significant sales revenue relative to its working capital that year. However, the ratio decreased in the following years, suggesting a change in the company's operational efficiency.

Overall, the analysis of Eastman Chemical Company's activity ratios highlights potential areas for improvement in inventory management and raises questions about the efficiency of accounts receivable and payables processes.

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Average number of days

Based on the provided data for Eastman Chemical Company's activity ratios, we can analyze the following:

1. Days of Inventory on Hand (DOH):
- The company's DOH has fluctuated over the years, starting at 77.46 days on December 31, 2020, decreasing to 68.83 days by December 31, 2021, experiencing an increase to 81.88 days by December 31, 2022, further increasing to 85.93 days by December 31, 2023, and reaching 102.32 days by December 31, 2024.
- A higher number of days of inventory on hand indicates that the company is holding onto inventory for a longer period before selling it, which may tie up working capital and increase carrying costs.

2. Days of Sales Outstanding (DSO):
- The data provided does not include information on Days of Sales Outstanding for any of the years, suggesting that this ratio may not be available or relevant for Eastman Chemical Company.
- DSO is used to evaluate how long it takes for a company to collect its accounts receivable. A lower DSO is typically preferred, as it implies faster collection of receivables.

3. Number of Days of Payables:
- Similar to DSO, the data does not provide information on the Number of Days of Payables for any of the years, indicating that this specific ratio is not included or disclosed.
- The Number of Days of Payables ratio measures how long a company takes to pay its suppliers. A longer period may indicate better cash flow management, but it could also signal potential liquidity issues or strained supplier relationships.

In conclusion, based on the available information, Eastman Chemical Company's inventory management, accounts receivable collection, and accounts payable practices are not fully detailed.

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Long-term

The Fixed Asset Turnover ratio for Eastman Chemical Company has shown an improving trend from 1.53 in 2020 to 2.10 in 2021, and then slightly decreasing to 2.05 in 2022. However, there is missing data for 2023 and 2024. This indicates that the company is generating more revenue from its fixed assets over the years, which is a positive sign of operational efficiency.

On the other hand, the Total Asset Turnover ratio has also been increasing steadily from 0.53 in 2020 to 0.68 in 2021, and further to 0.72 in 2022. However, the ratio declined slightly to 0.63 in 2023 and then to 0.62 in 2024. This suggests that Eastman Chemical Company is effectively utilizing its total assets to generate sales revenue, although there was a slight drop in efficiency in 2023 and 2024.

Overall, based on the analysis of the long-term activity ratios, Eastman Chemical Company has shown improvement in both fixed asset turnover and total asset turnover, indicating better utilization of assets to drive revenue generation, despite the recent minor fluctuations in performance.