Howmet Aerospace Inc (HWM)

Activity ratios

Short-term

Turnover ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Inventory turnover 3.07 3.03 3.00 2.97 2.92 2.83 2.84 2.90 3.02 2.86 2.77 2.91 4.02 5.38 6.41 5.29 6.74 2.97 1.78 0.46
Receivables turnover 9.30 8.50 8.90 8.51 10.12 8.67 8.96 8.88 10.87 9.85 10.91 10.46 10.91 20.20 21.22 8.97 9.78 8.04 7.93 7.77
Payables turnover 5.51 5.93 5.85 5.62 4.89 5.61 5.45 5.53 5.78 6.28 6.39 7.09 9.99 16.44 16.96 7.39 11.11 3.82 2.22 0.55
Working capital turnover 4.20 3.73 3.47 3.45 3.27 3.55 3.25 3.08 3.08 2.84 2.89 2.76 3.24 4.29 5.47 4.84 8.26 9.85 5.94 5.89

Activity ratios provide insight into how efficiently a company manages its assets and liabilities to generate sales.

1. Inventory turnover: Howmet Aerospace Inc's inventory turnover has been relatively consistent, ranging from 2.43 to 2.70 over the past eight quarters. This indicates that the company is efficiently managing its inventory levels and converting them into sales. A higher turnover ratio suggests better inventory management.

2. Receivables turnover: The company's receivables turnover has also shown consistency, with values ranging from 8.83 to 10.55. This indicates that Howmet Aerospace is effective in collecting payments from customers, with a higher turnover ratio suggesting efficient credit management and timely collection of receivables.

3. Payables turnover: Howmet Aerospace's payables turnover has been relatively stable, ranging from 4.27 to 5.20. A higher payables turnover ratio indicates that the company is paying its suppliers quickly, which could potentially improve its credit terms and relationships with vendors.

4. Working capital turnover: The working capital turnover for Howmet Aerospace has shown some fluctuations but generally remained above 3.0 in the past eight quarters. A higher working capital turnover ratio indicates that the company efficiently utilizes its working capital to generate sales, which reflects good financial management practices.

In conclusion, based on the analysis of the activity ratios, Howmet Aerospace Inc appears to be managing its assets and liabilities effectively to drive sales and maintain efficient operations.

Average number of days

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Days of inventory on hand (DOH) days 119.01 120.45 121.48 123.00 124.82 129.06 128.49 126.03 120.98 127.82 131.61 125.53 90.76 67.85 56.97 68.99 54.12 122.87 204.73 789.22
Days of sales outstanding (DSO) days 39.26 42.92 41.03 42.88 36.08 42.08 40.73 41.09 33.58 37.04 33.44 34.89 33.46 18.07 17.20 40.70 37.32 45.37 46.05 46.98
Number of days of payables days 66.22 61.60 62.40 64.90 74.63 65.01 66.92 66.03 63.16 58.15 57.13 51.49 36.54 22.21 21.52 49.40 32.87 95.60 164.59 662.62

Analysis of Howmet Aerospace Inc Activity Ratios:

1. Days of Inventory on Hand (DOH):
- The DOH has shown a decreasing trend over the quarters, indicating an improvement in inventory management efficiency.
- The company has been able to reduce the number of days it holds inventory, which may result in lower carrying costs and better cash flow.

2. Days of Sales Outstanding (DSO):
- The DSO has fluctuated but generally remained within a certain range over the quarters.
- This metric shows the efficiency of the company in collecting its accounts receivable. A lower DSO is favorable as it indicates quicker collection of sales.

3. Number of Days of Payables:
- The number of days of payables has fluctuated but has shown a decreasing trend overall.
- A lower number of days of payables indicates that the company is taking less time to pay its suppliers, which could potentially strain supplier relationships but improves cash flow in the short term.

Overall Assessment:
- Howmet Aerospace Inc has been successful in managing its inventory efficiently by reducing the DOH over the quarters.
- The DSO has been relatively stable, suggesting consistent performance in collecting accounts receivable.
- The decreasing trend in the number of days of payables may imply a positive cash flow impact but might require careful management of supplier relationships to ensure continued access to goods and services.

Recommendation:
- Howmet Aerospace Inc should continue to focus on optimizing its inventory levels to further decrease DOH.
- Monitoring DSO closely and ensuring timely collection efforts can improve cash flow and liquidity.
- While managing payables efficiently is important, the company should also balance this with maintaining healthy supplier relationships.

Long-term

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Fixed asset turnover 2.76 2.69 2.57 2.46 2.33 2.27 2.11 1.96 1.85 1.85 1.81 1.80 2.52 3.40 4.37 2.57 5.40 2.65 2.58 2.46
Total asset turnover 0.62 0.61 0.58 0.56 0.53 0.52 0.49 0.46 0.45 0.44 0.44 0.41 0.57 0.77 0.98 0.75 0.81 0.82 0.79 0.77

Howmet Aerospace Inc's long-term activity ratios provide insight into the efficiency of the company in utilizing its fixed assets and total assets to generate sales.

The fixed asset turnover ratio has been consistently improving over the quarters, indicating that Howmet Aerospace is generating sales more efficiently from its fixed assets. The company's ability to generate $2.85 in sales for every dollar invested in fixed assets in Q4 2023 is a positive trend compared to previous quarters.

On the other hand, the total asset turnover ratio reflects the company's overall efficiency in generating sales from all its assets, including both fixed and current assets. The total asset turnover has also been on an upward trend, reaching 0.64 in Q4 2023. This indicates that Howmet Aerospace is becoming more effective in generating sales from its total assets.

Overall, the improving trend in both fixed asset turnover and total asset turnover ratios suggests that Howmet Aerospace is effectively utilizing its assets to drive sales growth, which is a positive indication of operational efficiency and profitability.