Graphic Packaging Holding Company (GPK)

Short-term

Turnover ratios

Based on the provided data, we can analyze the activity ratios of Graphic Packaging Holding Company for the periods from December 31, 2019, to December 31, 2024.

1. Inventory Turnover: The inventory turnover ratio measures how efficiently a company manages its inventory. Graphic Packaging's inventory turnover has shown a slightly increasing trend over the years, ranging between 4.33 and 5.45. This indicates that the company is able to sell its inventory more frequently in recent years, which is a positive sign of efficiency in managing inventory levels and sales.

2. Receivables Turnover: The receivables turnover ratio reflects how quickly a company collects its accounts receivable. Graphic Packaging's receivables turnover has fluctuated over the years, with a range between 8.20 and 11.62. A higher receivables turnover ratio suggests that the company is efficient in collecting payments from customers, although there have been some variations in the efficiency of collections.

3. Payables Turnover: The payables turnover ratio indicates how quickly a company pays its suppliers. Graphic Packaging's payables turnover has also shown fluctuations, ranging between 6.02 and 8.90. A higher payables turnover ratio may imply that the company is managing its payables effectively, but the variations suggest some changes in payment terms or relationships with suppliers.

4. Working Capital Turnover: The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales. Graphic Packaging's working capital turnover has shown variability, with values between 6.99 and 40.00. A higher working capital turnover ratio suggests efficient use of working capital, but the significant fluctuations may indicate changing business conditions or capital management strategies.

In summary, Graphic Packaging Holding Company has shown mixed performance in its activity ratios over the years, with some ratios demonstrating improvement in efficiency while others displaying fluctuations. Monitoring these ratios can provide insights into the company's operational effectiveness and financial management practices.

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Average number of days

Analyzing the activity ratios of Graphic Packaging Holding Company, we observe the following trends:

1. Days of Inventory on Hand (DOH):
- DOH has shown a fluctuating trend over the reported periods, with a general decrease from 2019 to 2021, followed by a slight increase in 2022 and 2023.
- Despite the fluctuations, the company appears to have a reasonably efficient management of inventory levels, as indicated by the decreasing trend followed by relatively stable DOH figures in recent periods.
- A high DOH may tie up capital and increase carrying costs, while a low DOH may risk stockouts. Therefore, the company should aim for a balanced inventory management approach.

2. Days of Sales Outstanding (DSO):
- DSO has shown some variability but generally remained within a relatively narrow range throughout the periods.
- The company's ability to collect receivables seems to have improved slightly from 2019 to 2023, with DSO decreasing over the years.
- Consistent and prompt collections are essential for maintaining healthy cash flows. The decreasing trend in DSO indicates an effective accounts receivable management process.

3. Number of Days of Payables:
- The trend in days of payables demonstrates a general stability with slight fluctuations over the periods.
- The company has maintained a relatively stable payment cycle, with a slight increase observed in 2022 and 2024.
- Managing payables effectively can provide a source of short-term financing. However, overly extending payment periods can strain relationships with suppliers.

Overall, the company's management of inventory, receivables, and payables appears to be reasonably effective, with efforts to optimize working capital and cash flow cycles. Continuous monitoring and adjustments in these activity ratios can help maintain a healthy balance between liquidity and operational efficiency.

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Long-term

Based on the provided data for Graphic Packaging Holding Company, we can analyze the long-term activity ratios of the company using fixed asset turnover and total asset turnover ratios.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how efficiently the company is utilizing its fixed assets to generate sales. A higher ratio indicates better asset utilization.
- Graphic Packaging Holding Company's fixed asset turnover ratio has shown a slightly declining trend from 1.89 on December 31, 2019, to 1.68 on December 31, 2024, with fluctuations in between.
- The ratio improved from 1.53 on December 31, 2021, to a peak of 2.06 on March 31, 2023, before decreasing again.
- The company's fixed asset turnover ratio on December 31, 2024, was below the levels seen in the previous years but remained relatively stable compared to the fluctuations observed earlier.

2. Total Asset Turnover:
- The total asset turnover ratio indicates how effectively the company is using its total assets to generate revenue. A higher ratio signifies efficient asset utilization.
- Graphic Packaging Holding Company's total asset turnover ratio fluctuated between 0.68 on December 31, 2021, and 0.91 on March 31, 2023.
- The ratio experienced an overall increasing trend from the end of 2021 to the first half of 2023 before declining slightly by December 31, 2024.
- The total asset turnover ratio on December 31, 2024, was 0.79, which was lower compared to the peak seen earlier but still relatively higher than the levels observed in 2021.

In conclusion, while the company's fixed asset turnover ratio exhibited some fluctuations and a slight decline over the period, the total asset turnover ratio showed a more volatile trend with some periods of improvement followed by declines. It suggests that Graphic Packaging Holding Company may need to focus on optimizing its asset utilization efficiency to enhance its long-term operational performance and profitability.