FMC Corporation (FMC)

Short-term

Turnover ratios

FMC Corp.'s activity ratios provide insight into the efficiency of its asset management and working capital utilization over the past five years.

1. Inventory Turnover:
- The inventory turnover ratio measures how effectively a company is managing its inventory levels. FMC Corp.'s inventory turnover has shown a decreasing trend from 2.48 in 2019 to 1.54 in 2023. This indicates that the company is holding onto its inventory for a longer period, which may suggest slowing sales or overstocking.

2. Receivables Turnover:
- The receivables turnover ratio reflects the company's efficiency in collecting outstanding receivables from customers. FMC Corp.'s receivables turnover has fluctuated over the years, ranging from 1.66 in 2023 to 2.07 in 2019. A higher turnover ratio indicates quicker collection of receivables, which is favorable for cash flow management.

3. Payables Turnover:
- The payables turnover ratio shows how efficiently a company is managing its accounts payable. FMC Corp.'s payables turnover has increased steadily from 2.81 in 2019 to 4.41 in 2023. A higher turnover ratio implies that the company is paying its suppliers more quickly, which could potentially strain cash flows but also indicates strong supplier relationships.

4. Working Capital Turnover:
- The working capital turnover ratio measures how well a company is utilizing its working capital to generate sales. FMC Corp.'s working capital turnover has also exhibited a decreasing trend from 3.41 in 2019 to 2.57 in 2023. A decreasing turnover ratio may signify inefficiencies in working capital management or a decline in sales relative to working capital.

Overall, FMC Corp. should closely monitor its activity ratios to ensure optimal management of its inventory levels, receivables collection, payables management, and working capital utilization to enhance operational efficiency and profitability.

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Average number of days

FMC Corp.'s activity ratios provide insights into the efficiency of its management of inventory, receivables, and payables over the past five years.

1. Days of Inventory on Hand (DOH): The DOH ratio indicates how many days, on average, it takes for the company to sell its inventory. A higher DOH value suggests slower inventory turnover. FMC Corp.'s DOH has increased over the past five years, from 146.94 days in 2019 to 237.02 days in 2023. This trend indicates a potential inefficiency in managing inventory levels, which could tie up capital and lead to increased carrying costs.

2. Days of Sales Outstanding (DSO): The DSO ratio shows the average number of days it takes for the company to collect payment from its customers. A higher DSO value suggests a longer collection period for receivables. FMC Corp.'s DSO has also increased over the period, from 176.66 days in 2019 to 219.90 days in 2023. This upward trend indicates that the company may be facing challenges in collecting payments promptly, which could impact its cash flow and working capital management.

3. Number of Days of Payables: This ratio indicates the average number of days it takes for the company to pay its suppliers. A higher number of days of payables suggests that the company is taking longer to settle its payables. FMC Corp.'s number of days of payables has fluctuated over the years, from 130.05 days in 2019 to 82.79 days in 2023. The decrease in the number of days of payables in 2023 may indicate a more efficient management of payables, potentially improving liquidity and cash flow.

In summary, FMC Corp. needs to address its increasing DOH and DSO ratios to enhance operational efficiency and cash flow management. Despite the fluctuation in the number of days of payables, the recent decrease suggests a positive trend towards improving payables management.

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Long-term

The long-term activity ratios for FMC Corp. provide insights into the efficiency of the company in utilizing its fixed and total assets to generate sales. The fixed asset turnover has shown a declining trend from 6.08 in 2019 to 5.03 in 2023, indicating that the company is generating fewer sales from its fixed assets over the years. This may suggest either a decrease in the efficiency of the company's fixed asset utilization or a slower growth in sales relative to its fixed asset base.

On the other hand, the total asset turnover has also exhibited a decreasing trend, declining from 0.47 in 2019 to 0.38 in 2023. This implies that the company is generating lower sales in relation to its total assets, which could indicate potential operational inefficiencies or a slower turnover of total assets.

Overall, the decreasing trends in both fixed asset turnover and total asset turnover ratios suggest that FMC Corp. may need to focus on improving its asset utilization efficiency to enhance its revenue generation and overall performance. Further analysis of the company's operational strategies and asset management practices may be necessary to address these declining trends and improve the company's long-term activity ratios.