Hexcel Corporation (HXL)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.58 | 4.33 | 5.03 | 6.76 | 5.65 |
| Receivables turnover | 7.49 | 6.92 | 8.02 | 11.65 | 10.15 |
| Payables turnover | 9.62 | 8.89 | 10.91 | 20.62 | 11.93 |
| Working capital turnover | 3.21 | 3.81 | 3.49 | 4.14 | 6.04 |
The activity ratios of Hexcel Corp. provide insights into the efficiency of the company's operations in managing its assets and liabilities over the past five years.
1. Inventory turnover:
- Hexcel's inventory turnover has fluctuated over the years, ranging from 3.82 to 5.91.
- The ratio indicates how efficiently the company is managing its inventory by selling and replenishing stock. A higher ratio suggests efficient inventory management, while a lower ratio may indicate overstocking or slow-moving inventory.
2. Receivables turnover:
- The receivables turnover for Hexcel has also varied over the years, with values between 7.08 and 11.98.
- This ratio reflects how quickly the company is collecting payments from its customers. A higher turnover implies effective credit management and timely collection of accounts receivable.
3. Payables turnover:
- Hexcel's payables turnover has shown fluctuations, ranging from 7.85 to 18.04.
- This ratio indicates how quickly the company is paying its suppliers and vendors. A higher turnover may suggest that Hexcel is effectively managing its payables and maintaining good relationships with its creditors.
4. Working capital turnover:
- The working capital turnover ratio has declined over the years, from 6.16 to 3.26.
- This ratio measures how efficiently the company is utilizing its working capital to generate sales. A lower turnover could imply inefficiencies in using available capital to drive revenue growth.
Overall, Hexcel Corp. should focus on optimizing its inventory turnover, receivables turnover, and working capital turnover to enhance operational efficiency and profitability. Monitoring and improving these activity ratios can help the company strengthen its financial position and competitiveness in the market.
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 | 79.77 | 84.27 | 72.59 | 53.98 | 64.64 |
| Days of sales outstanding (DSO) | days | 48.73 | 52.73 | 45.48 | 31.34 | 35.96 |
| Number of days of payables | days | 37.95 | 41.04 | 33.45 | 17.70 | 30.58 |
To analyze Hexcel Corp.'s activity ratios, we will look at three key ratios: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.
1. Days of Inventory on Hand (DOH): This ratio indicates how many days, on average, inventory is held before being sold. A lower DOH signifies more efficient inventory management. Hexcel Corp.'s DOH has been fluctuating over the past five years, with a significant increase in 2022 and a slight decrease in 2023. This suggests that the company may have experienced challenges in managing inventory efficiently in 2022, but has since improved in the most recent year.
2. Days of Sales Outstanding (DSO): DSO measures the average number of days it takes for the company to collect revenue after a sale is made. A lower DSO indicates faster collection of receivables, which is typically positive. Hexcel Corp.'s DSO has shown some variability over the years, reflecting changes in the company's credit policies or customer payment behavior. There was a notable increase in DSO in 2022, which improved in the following years, suggesting better accounts receivable management.
3. Number of Days of Payables: This ratio represents the average number of days the company takes to pay its suppliers. A higher number of days indicates that the company may be taking longer to pay its bills, which can be advantageous from a cash flow perspective. Hexcel Corp.'s number of days of payables has also fluctuated, with a substantial increase in 2022. This may suggest that the company extended its payment terms with suppliers that year.
Overall, while Hexcel Corp. has experienced fluctuations in its activity ratios over the past five years, it seems to have made some improvements in managing inventory, accounts receivable, and payables in the most recent year. Further analysis and comparison with industry benchmarks would provide a more comprehensive assessment of the company's performance in these areas.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 1.05 | 0.93 | 0.74 | 0.78 | 1.19 |
| Total asset turnover | 0.60 | 0.54 | 0.46 | 0.50 | 0.74 |
Hexcel Corp.'s long-term activity ratios indicate the efficiency at which the company is utilizing its fixed assets and total assets to generate sales revenue. The fixed asset turnover has shown a fluctuating trend over the past five years, ranging from 0.76 to 1.21. In 2023, the ratio improved to 1.07, reflecting an increase in sales generated per dollar of fixed assets invested. This indicates that Hexcel is generating more revenue from its fixed assets compared to previous years.
On the other hand, the total asset turnover has also displayed variability, with values ranging from 0.47 to 0.75. The ratio in 2023 stood at 0.61, representing a moderate increase from the prior year and suggesting that Hexcel is utilizing its total assets more efficiently to generate sales. Although the total asset turnover is lower compared to the fixed asset turnover, it provides a comprehensive view of the company's overall asset utilization.
Overall, both the fixed asset turnover and total asset turnover ratios for Hexcel Corp. have shown positive trends in 2023, indicating improved efficiency in utilizing fixed and total assets to generate revenue. Continued monitoring of these ratios will be valuable to assess the company's operational performance and asset utilization efficiency in the long term.