Hexcel Corporation (HXL)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.56 | 4.58 | 4.33 | 5.03 | 6.76 |
| Receivables turnover | 8.98 | 7.49 | 6.92 | 8.02 | 11.65 |
| Payables turnover | 11.41 | 9.62 | 8.89 | 10.91 | 20.62 |
| Working capital turnover | 4.45 | 3.21 | 3.81 | 3.49 | 4.14 |
Hexcel Corporation's inventory turnover ratio has been declining over the past five years, indicating a decrease in the efficiency of inventory management. The ratio decreased from 6.76 in 2020 to 4.56 in 2024. This implies that the company is selling its inventory less frequently each year.
The receivables turnover ratio also decreased over the same period, from 11.65 in 2020 to 8.98 in 2024. This suggests that it is taking the company longer to collect payments from its customers, potentially impacting cash inflows.
On the other hand, the payables turnover ratio decreased from 20.62 in 2020 to 11.41 in 2024. This indicates that the company is taking longer to pay its suppliers, which could have implications for its relationships with vendors.
The working capital turnover ratio fluctuated over the years, with a peak in 2024 at 4.45. This ratio measures how efficiently the company is using its working capital to generate sales. The fluctuation in this ratio could indicate changes in the company's operating and cash conversion cycles.
Overall, the trend in these activity ratios suggests that Hexcel Corporation may need to focus on improving inventory management, accelerating accounts receivable collection, and potentially optimizing its payment terms with suppliers to enhance operational efficiency and cash flow management.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 80.05 | 79.77 | 84.27 | 72.59 | 53.98 |
| Days of sales outstanding (DSO) | days | 40.66 | 48.73 | 52.73 | 45.48 | 31.34 |
| Number of days of payables | days | 31.98 | 37.95 | 41.04 | 33.45 | 17.70 |
The activity ratios of Hexcel Corporation, as reflected in the data provided, show fluctuations in the efficiency of its operational processes over the years.
1. Days of Inventory on Hand (DOH):
- The DOH indicates the number of days it takes for a company to sell its inventory. Hexcel Corporation's DOH has increased from 53.98 days in 2020 to 80.05 days in 2024. This suggests that Hexcel may be holding onto its inventory for longer periods, which could tie up working capital and potentially increase carrying costs.
2. Days of Sales Outstanding (DSO):
- The DSO ratio represents the average number of days it takes for a company to collect its accounts receivable. Hexcel's DSO has varied over the years, with a peak of 52.73 days in 2022. A higher DSO could indicate a slower collection process, impacting cash flows and liquidity.
3. Number of Days of Payables:
- This ratio reflects how long it takes for a company to pay its suppliers. Hexcel's payables period has fluctuated, with a notable increase from 17.70 days in 2020 to 41.04 days in 2022. A longer payables period may signal potential cash management strategies or negotiating power with suppliers.
Overall, analyzing these activity ratios collectively provides insights into Hexcel Corporation's efficiency in managing its inventory, receivables, and payables. Fluctuations in these ratios can impact the company's working capital, cash flows, and overall financial performance.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 1.19 | 1.05 | 0.93 | 0.74 | 0.78 |
| Total asset turnover | 0.70 | 0.60 | 0.54 | 0.46 | 0.50 |
Hexcel Corporation's fixed asset turnover ratio has shown an improving trend over the years, indicating that the company is generating more revenue from its fixed assets. The ratio increased from 0.78 in 2020 to 1.19 in 2024, reflecting better utilization of its fixed assets to generate sales.
Similarly, the total asset turnover ratio of Hexcel Corporation has also been increasing steadily from 0.50 in 2020 to 0.70 in 2024. This signifies that the company is becoming more efficient in generating sales in relation to its total assets.
Overall, both the fixed asset turnover and total asset turnover ratios of Hexcel Corporation demonstrate a positive trend, suggesting an improvement in the company's long-term asset utilization efficiency over the years.