Howmet Aerospace Inc (HWM)

Short-term

Turnover ratios

The activity ratios of Howmet Aerospace Inc indicate the efficiency of the company in managing its operating assets. Let's delve into the analysis:

1. Inventory Turnover:
- Howmet Aerospace's inventory turnover has ranged from 2.55 to 2.78 over the last five years.
- A higher inventory turnover ratio signifies a quicker movement of inventory, which is generally favorable.
- The increasing trend in the inventory turnover ratio from 2022 to 2024 indicates that the company is managing its inventory more efficiently.

2. Receivables Turnover:
- The data provided does not show any values for the receivables turnover ratio for the observed years.
- Receivables turnover ratio measures how effectively a company is collecting its receivables from customers.
- The absence of data for this ratio makes it challenging to assess the efficiency of the company in collecting receivables.

3. Payables Turnover:
- Similar to the receivables turnover, there is no information available for the payables turnover ratio.
- Payables turnover ratio reflects how quickly a company pays its suppliers.
- The lack of data for this ratio limits the assessment of the company's management of payables.

4. Working Capital Turnover:
- Howmet Aerospace's working capital turnover has improved from 2.61 in 2020 to 4.10 in 2024.
- A higher working capital turnover ratio indicates that the company is efficiently using its working capital to generate sales.
- The rising trend in the working capital turnover ratio suggests that the company is becoming more efficient in utilizing its working capital over the years.

In conclusion, while the inventory turnover and working capital turnover ratios show positive trends, the unavailability of data for receivables turnover and payables turnover limits a comprehensive evaluation of Howmet Aerospace Inc's overall activity efficiency.

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Average number of days

Activity ratios provide insights into how efficiently a company is managing its assets and operations. Let's analyze the activity ratios of Howmet Aerospace Inc based on the provided data:

1. Days of Inventory on Hand (DOH):
- The DOH indicates the average number of days it takes for a company to sell its inventory. Howmet Aerospace's DOH has shown a slight increase over the years, from 140.05 days in 2020 to 131.20 days in 2024. A decreasing trend in DOH is generally considered positive as it suggests efficient inventory management.

2. Days of Sales Outstanding (DSO):
- Unfortunately, the data for DSO is not available, making it challenging to analyze Howmet Aerospace's efficiency in collecting accounts receivable. A decreasing trend in DSO would indicate that the company is collecting payments from customers more quickly, which is favorable.

3. Number of Days of Payables:
- Similar to DSO, data for the number of days of payables is not provided. Monitoring this ratio is crucial as a higher number of days of payables can indicate that a company is taking longer to pay its suppliers, potentially straining relationships if extended beyond industry norms.

In conclusion, while we can observe the trend in inventory management efficiency through the DOH metric, the lack of data for DSO and the number of days of payables limits a comprehensive assessment of Howmet Aerospace's overall activity ratios. Monitoring these ratios over time can provide valuable insights into the company's operational efficiency and financial health.

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Long-term

Long-term activity ratios such as fixed asset turnover and total asset turnover provide insights into how efficiently Howmet Aerospace is utilizing its long-term assets to generate sales.

1. Fixed Asset Turnover:
- In 2020, the fixed asset turnover ratio was 2.03, indicating that for every dollar invested in fixed assets, the company generated $2.03 in sales.
- This ratio remained relatively stable in 2021 at 2.02.
- However, there was a significant improvement in 2022, with the ratio increasing to 2.43. This suggests that the company was able to generate more revenue per dollar of fixed assets invested.
- Unfortunately, data for 2023 and 2024 are unavailable, making it challenging to assess the trend beyond 2022.

2. Total Asset Turnover:
- In 2020, the total asset turnover ratio was relatively low at 0.46, indicating that the company generated $0.46 in sales for every dollar of total assets.
- There was a slight improvement in 2021, with the ratio increasing to 0.49, suggesting a better utilization of total assets to generate revenue.
- The trend continued in 2022, as the ratio further increased to 0.55, indicating increased efficiency in asset utilization.
- Notably, the total asset turnover ratio showed robust improvement in 2023, reaching 0.64, followed by a further increase to 0.71 in 2024. These figures suggest a significant enhancement in the company's ability to generate sales relative to its total asset base over the years.

Overall, the analysis of Howmet Aerospace's long-term activity ratios indicates an improvement in asset utilization efficiency, particularly in total asset turnover, reflecting the company's ability to efficiently generate revenue relative to its asset base over the years.