Graphic Packaging Holding Company (GPK)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.71 | 5.32 | 4.88 | 4.84 | 4.62 |
| Receivables turnover | 11.29 | 10.74 | 8.33 | 10.03 | 12.21 |
| Payables turnover | 7.55 | 7.60 | 6.02 | 6.62 | 7.08 |
| Working capital turnover | 36.83 | 12.21 | 15.80 | 40.00 | 10.15 |
The activity ratios of Graphic Packaging Holding Co over the past five years provide valuable insights into the efficiency and effectiveness of the company's operations.
1. Inventory Turnover:
- Graphic Packaging's inventory turnover has shown a decreasing trend from 2019 to 2023, indicating that the company is selling its inventory at a slightly slower pace. However, the ratio remains relatively stable around 4, suggesting that the company effectively manages its inventory levels to support sales.
2. Receivables Turnover:
- The company's receivables turnover has fluctuated slightly over the period, but overall shows an increasing trend. This implies that Graphic Packaging has been collecting its accounts receivable more efficiently in recent years, which is positive for cash flow management.
3. Payables Turnover:
- The payables turnover ratio has also demonstrated a slight decrease over the years, suggesting that Graphic Packaging is taking longer to pay its suppliers. This may indicate that the company is managing its payables strategically to improve cash flow or negotiate better payment terms with suppliers.
4. Working Capital Turnover:
- Graphic Packaging's working capital turnover has varied significantly over the years, with a notable increase in 2023 compared to the previous years. A high working capital turnover ratio indicates that the company generates a significant amount of revenue relative to its working capital, reflecting efficient utilization of resources to generate sales.
Overall, while some fluctuations are observed in Graphic Packaging's activity ratios over the past five years, the company appears to be effectively managing its inventory, receivables, payables, and working capital to support its operations and financial performance. Monitoring these ratios can help assess the company's operational efficiency and effectiveness in managing its resources.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 77.55 | 68.66 | 74.77 | 75.41 | 78.94 |
| Days of sales outstanding (DSO) | days | 32.33 | 33.99 | 43.81 | 36.39 | 29.89 |
| Number of days of payables | days | 48.37 | 48.01 | 60.64 | 55.15 | 51.58 |
The Days of Inventory on Hand (DOH) for Graphic Packaging Holding Co has shown some fluctuation over the past five years, ranging from 75.38 days in 2020 to 87.57 days in 2023. This indicates that the company has, on average, held inventory for these durations before selling it.
The Days of Sales Outstanding (DSO) has also varied from 29.89 days in 2019 to 43.81 days in 2021. This metric measures how long it takes for the company to collect payment after making a sale.
The Number of Days of Payables demonstrates the company's ability to manage its payables, with values ranging from 51.58 days in 2019 to 67.48 days in 2021.
Overall, there seems to be a trend of increasing DOH and DSO from 2020 to 2021, which might imply potential issues in inventory management and collection of accounts receivable during that period. Conversely, the company has slightly extended its payment days to suppliers, as seen in the increase of days of payables from 2019 to 2021.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 1.89 | 2.06 | 1.53 | 1.84 | 1.89 |
| Total asset turnover | 0.84 | 0.91 | 0.68 | 0.84 | 0.84 |
The long-term activity ratios of Graphic Packaging Holding Co indicate how efficiently the company is utilizing its fixed assets and total assets to generate sales revenue over the years. The fixed asset turnover ratio measures the company's ability to generate sales from its investment in fixed assets.
Looking at the trend in the fixed asset turnover ratio, we see a slight decline from 1.89 in 2019 to 1.53 in 2021, followed by a recovery to 2.06 in 2022. However, in 2023, the ratio decreased slightly to 1.89. This indicates that, on average, the company is generating $1.89 in sales for every dollar invested in fixed assets.
On the other hand, the total asset turnover ratio measures how efficiently the company is using its total assets to generate sales. The trend in total asset turnover ratio shows consistency, hovering around the range of 0.84 to 0.91 over the five-year period. This suggests that, on average, the company generates $0.84 to $0.91 in sales for every dollar of total assets.
In conclusion, while the fixed asset turnover ratio fluctuates, indicating some variability in the efficiency of utilizing fixed assets for generating sales, the total asset turnover ratio remains relatively stable. Overall, further investigation into the company's fixed asset management practices and strategies to enhance asset utilization efficiency could potentially lead to improved long-term performance.