FMC Corporation (FMC)

Short-term

Turnover ratios

FMC Corp.'s activity ratios indicate the efficiency of the company in managing its assets and liabilities to generate revenue and sustain operations.

1. Inventory Turnover:
- FMC Corp.'s inventory turnover has been declining over the past quarters, indicating a slower rate at which inventory is being sold and replaced.
- This decline may suggest potential issues such as excess inventory levels or slowing sales, which could impact the company's liquidity and profitability.

2. Receivables Turnover:
- The receivables turnover ratio fluctuates but generally remains at an acceptable level, indicating the company's ability to efficiently collect payments from customers.
- A higher ratio signifies quicker collection of receivables, which contributes to improved cash flow and liquidity.

3. Payables Turnover:
- FMC Corp.'s payables turnover ratio has been increasing, indicating a longer period for the company to pay its suppliers.
- A higher ratio may suggest a more favorable credit term with suppliers, but it could also imply potential cash flow constraints or strained relationships with vendors.

4. Working Capital Turnover:
- The working capital turnover ratio shows a decreasing trend over the quarters, reflecting a declining efficiency in utilizing working capital to generate revenue.
- A lower ratio may indicate inefficiencies in managing current assets and liabilities, potentially impacting the company's ability to meet short-term obligations.

In conclusion, while FMC Corp. demonstrates competency in managing receivables and payables to some extent, there are concerns regarding inventory management and working capital efficiency that should be further addressed to enhance overall operational performance and financial health.

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Average number of days

Activity ratios are used to assess how well a company manages its assets and liabilities to generate revenue. Let's analyze the activity ratios of FMC Corp. based on the provided data:

1. Days of Inventory on Hand (DOH):
- The Days of Inventory on Hand measure how many days, on average, a company holds its inventory before selling it.
- FMC Corp.'s DOH fluctuated during the quarters, ranging from 173.45 to 253.14 days.
- The trend shows an increase in inventory holding days from Q4 2022 to Q3 2023, indicating potential inefficiencies in managing inventory levels.
- FMC Corp. should aim to reduce the DOH to free up working capital tied up in inventory and improve cash flow.

2. Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding metric represents how long it takes for a company to collect its accounts receivable.
- FMC Corp.'s DSO varied across quarters, with values ranging from 169.64 to 219.90 days.
- The trend shows fluctuations in the collection period, with an increase in Q4 2023 compared to Q3 2023.
- A high DSO suggests a slower collection process, impacting liquidity. FMC Corp. should focus on efficient credit management to reduce DSO.

3. Number of Days of Payables:
- The Number of Days of Payables indicates the average number of days a company takes to pay its suppliers.
- FMC Corp.'s payables days ranged from 82.79 to 131.51 days over the quarters.
- The trend shows fluctuations in payment periods, with an increase in Q3 2023 compared to Q2 2023.
- A longer payable period can indicate better cash flow management but may strain supplier relationships. FMC Corp. should balance payables to optimize cash utilization and maintain vendor goodwill.

In conclusion, FMC Corp. should focus on optimizing inventory levels, enhancing accounts receivable collection efficiency, and managing payables effectively to improve working capital management and overall financial performance.

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Long-term

The long-term activity ratios of FMC Corp., as indicated by the fixed asset turnover and total asset turnover, show the efficiency of the company in utilizing its assets to generate sales revenue.

1. Fixed asset turnover: This ratio measures how effectively the company is using its fixed assets to generate sales. A higher fixed asset turnover ratio indicates that the company is generating more revenue from its fixed assets. FMC Corp.'s fixed asset turnover has been consistently high, ranging from 5.03 to 7.08 over the past eight quarters. This indicates that the company has been efficiently utilizing its long-term assets to drive sales.

2. Total asset turnover: The total asset turnover ratio indicates how efficiently the company is utilizing all its assets to generate revenue. A higher total asset turnover ratio suggests that the company is generating more sales from its total assets. FMC Corp.'s total asset turnover has been relatively stable, ranging from 0.38 to 0.52 over the same period. This suggests that the company has been consistent in generating revenue from its total asset base.

Overall, FMC Corp. has shown strong operational efficiency in terms of both fixed asset turnover and total asset turnover ratios, indicating that the company is effectively utilizing its assets to drive sales and create value for its shareholders.