Element Solutions Inc (ESI)

Activity ratios

Short-term

Turnover ratios

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Inventory turnover 5.77 4.73 5.49 5.24 5.26
Receivables turnover 5.59 5.05 5.59 4.88 4.60
Payables turnover 11.72 10.06 22.05 10.40 11.17
Working capital turnover 2.76 2.82 3.02 3.00 2.74

The activity ratios of Element Solutions Inc, covering inventory turnover, receivables turnover, payables turnover, and working capital turnover from December 2020 through December 2024, reveal the company’s operational efficiency trends over this period.

Inventory Turnover:
The inventory turnover ratio demonstrates a generally stable activity in managing inventory levels, with minor fluctuations. It started at 5.26 times in December 2020, marginally decreasing to 5.24 times in data for December 2021. A slight increase occurred by December 2022 to 5.49 times, indicating a modest improvement in inventory management efficiency. Subsequently, a decline to 4.73 times in December 2023 suggests some accumulation or slower inventory turnover. By December 2024, the ratio rebounded to 5.77 times, surpassing earlier levels and indicating a renewed efficiency in inventory management.

Receivables Turnover:
Receivables turnover ratios display a generally positive trend, reflecting improvement in the collection of receivables. From 4.60 times at the end of December 2020, the ratio increased to 4.88 in December 2021 and further rose to 5.59 in December 2022. Slight declines occurred afterward, with the ratio declining to 5.05 in December 2023 but returning to 5.59 in December 2024. The pattern suggests that the company managed to enhance receivables collection efficiency over the period, despite a temporary dip, ultimately achieving levels consistent with or slightly better than prior years.

Payables Turnover:
The payables turnover ratio exhibits significant fluctuation. It was 11.17 times in December 2020, decreasing slightly to 10.40 in December 2021. A notable spike to 22.05 times in December 2022 indicates a substantial acceleration in paying suppliers, potentially reflecting changes in payment policies or cash flow management. However, the ratio declines again to 10.06 in December 2023 before increasing to 11.72 in December 2024, showing some stabilization but still within a range indicating changes in payment cycles or credit terms.

Working Capital Turnover:
The working capital turnover ratios remained relatively stable, with marginal variations. It was 2.74 in December 2020, rising slightly to 3.00 in December 2021, and then to 3.02 in December 2022. A slight decrease to 2.82 occurred in December 2023, with a marginal decline again to 2.76 in December 2024. These ratios suggest that the company’s utilization of working capital for revenue-generating activities has been consistent, reflecting stable operational efficiency in asset management relative to sales.

In summary, Element Solutions Inc exhibits a predominantly stable and improving operational efficiency in its receivables management and inventory turnover, with some variability noted in payables turnover, possibly influenced by strategic or market factors. The steady working capital turnover indicates consistent utilization of operational resources across the period.


Average number of days

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Days of inventory on hand (DOH) days 63.23 77.12 66.45 69.60 69.43
Days of sales outstanding (DSO) days 65.31 72.24 65.26 74.86 79.43
Number of days of payables days 31.15 36.28 16.55 35.10 32.68

The activity ratios of Element Solutions Inc., as reflected in the provided data, reveal notable trends across inventory management, receivables collection, and payables payment periods over the five-year span from December 31, 2020, to December 31, 2024.

Days of Inventory on Hand (DOH):
The company’s inventory turnover period experienced minor fluctuations during the observed period. It started at approximately 69.43 days at the end of 2020, slightly increased to 69.60 days in 2021, then decreased marginally to 66.45 days in 2022. A significant increase occurred at the end of 2023, with DOH rising to 77.12 days, indicating that inventory is held longer during this period. However, there was a subsequent reduction in 2024 to 63.23 days, reflecting improved inventory efficiency and potentially quicker product turnover or better inventory management practices.

Days of Sales Outstanding (DSO):
The receivables collection period demonstrated a decreasing trend from 79.43 days at the close of 2020 to a low of 65.26 days in 2022, indicating an improvement in the company’s collection efficiency. In 2023, the DSO increased to approximately 72.24 days, suggesting a slight relaxation in receivables management or changes in credit policies. By 2024, the DSO decreased again to 65.31 days, suggesting a renewed focus on collection efficiency and a return to more prompt receivables turnover.

Number of Days of Payables:
The period the company takes to pay its suppliers fluctuated over the years. In 2020, payables days stood at 32.68 days, increasing marginally to 35.10 days in 2021. A notable reduction was observed in 2022, when payables days shrank to 16.55 days, indicating faster payments to suppliers or a change in payment terms. Subsequently, in 2023, the payables period increased again to 36.28 days, and in 2024, it decreased slightly to 31.15 days, reflecting slight variations in the company’s payment policies or cash management practices.

Overall interpretation:
The activity ratios suggest that Element Solutions Inc. has shown improvements in receivables collection, evidenced by the reduction in DSO over most years. Inventory management saw a period of elongation in 2023 but improved significantly in 2024, implying enhanced inventory turnover. The payables period exhibits variability, with periods of faster payments interspersed with delays, reflecting adjustments in payment timing strategies. These ongoing shifts underscore the company's efforts to optimize operational efficiency, cash flow, and working capital management across the observed period.


Long-term

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Fixed asset turnover 9.20 8.63 7.71
Total asset turnover 0.50 0.47 0.52 0.47 0.41

The analysis of Element Solutions Inc.'s long-term activity ratios reveals the following trends based on the provided data.

The Fixed Asset Turnover ratio demonstrates a consistent upward trajectory from 7.71 at the end of 2020 to 8.63 at the end of 2021, followed by a further increase to 9.20 at the close of 2022. This indicates that the company has improved its efficiency in generating sales from its fixed assets over this period. The continuous rise suggests effective utilization of property, plant, and equipment and potentially strategic investments or operational efficiencies that maximize the productivity of fixed assets.

For the period ending December 31, 2023, and projecting into 2024, the data is unavailable, which precludes assessment for these years. However, the preceding trend suggests that if the ratio maintains or further improves, it would signify ongoing enhancements in asset utilization efficiency.

The Total Asset Turnover ratio exhibits a gradual increase from 0.41 in 2020 to 0.47 in 2021, and further to 0.52 in 2022, indicating that the company's overall asset base is being used more effectively to generate sales. The slight decline to 0.47 in 2023, followed by a modest increase to 0.50 in 2024, suggests some fluctuation but an overall positive trend in the efficiency of total assets over time.

Overall, the long-term activity ratios depict a pattern of improving asset efficiency, with notable gains in fixed asset utilization and incremental improvements in total asset turnover. This may reflect management's focus on optimizing asset management and operational performance, contributing to more effective use of the company's asset base for revenue generation over the analyzed period.