International Flavors & Fragrances Inc (IFF)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.74 | 4.55 | 4.61 | 3.67 | 3.67 |
| Receivables turnover | 6.37 | 6.67 | 5.96 | 5.33 | 5.71 |
| Payables turnover | 10.31 | 10.12 | 7.57 | 7.48 | 8.08 |
| Working capital turnover | 4.34 | 3.27 | 3.39 | 4.28 | 3.60 |
Inventory turnover measures how efficiently a company manages its inventory by showing how many times the inventory is sold and replaced within a specific period. International Flavors & Fragrances Inc. has shown an improving trend in inventory turnover over the past five years, indicating better inventory management efficiency.
Receivables turnover ratio reflects how quickly a company collects its accounts receivables. A higher receivables turnover ratio suggests that International Flavors & Fragrances Inc. has been effective in collecting its outstanding receivables. The company has shown a relatively stable and increasing trend in receivables turnover over the past five years, indicating efficient collection practices.
Payables turnover ratio calculates how many times a company pays its suppliers during a period. A higher payables turnover ratio suggests that the company is managing its payables effectively. International Flavors & Fragrances Inc. has shown a slightly decreasing trend in payables turnover over the past five years, indicating a longer average time to pay its suppliers.
Working capital turnover ratio measures how efficiently a company utilizes its working capital to generate revenue. A higher working capital turnover ratio indicates that the company is effectively using its resources to generate sales. International Flavors & Fragrances Inc. has shown a fluctuating trend in working capital turnover over the past five years, with some years showing significant improvements in efficiency.
Overall, International Flavors & Fragrances Inc. has demonstrated varying degrees of efficiency in managing its inventory, receivables, payables, and working capital turnover ratios over the past five years. The company's improving inventory turnover and receivables turnover ratios suggest better inventory and receivables management practices, while the fluctuating payables turnover and working capital turnover ratios indicate areas that may require some attention for further optimization.
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 | 63.61 | 80.18 | 79.17 | 99.39 | 99.34 |
| Days of sales outstanding (DSO) | days | 57.26 | 54.76 | 61.20 | 68.52 | 63.97 |
| Number of days of payables | days | 35.39 | 36.08 | 48.21 | 48.82 | 45.15 |
Activity ratios provide insights into how efficiently a company manages its assets and liabilities to generate revenue. For International Flavors & Fragrances Inc., observing the trend in activity ratios over the past five years can help assess its operational efficiency.
1. Days of Inventory on Hand (DOH):
- The trend shows fluctuations in the days of inventory on hand, indicating changes in the company's inventory management strategies.
- In 2023, the DOH decreased to 115.94 days from 138.75 days in 2022, suggesting an improvement in inventory turnover efficiency.
- The company may have focused on better inventory control and management practices to reduce excess inventory levels, which could positively impact cash flow and profitability.
2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects the average number of days it takes for the company to collect payment from customers.
- International Flavors & Fragrances Inc. has shown variations in DSO over the years, with a decrease from 80.54 days in 2020 to 60.83 days in 2023.
- A decreasing trend in DSO indicates a more efficient collection process, potentially resulting from streamlined credit policies or improved customer relationships.
3. Number of Days of Payables:
- This ratio measures how long a company takes to pay its suppliers or vendors.
- The trend in the number of days of payables for International Flavors & Fragrances Inc. has been volatile over the years.
- In 2023, the number of days of payables increased to 64.50 days compared to 62.44 days in 2022, suggesting a lengthening of the payment cycle.
- A longer payables period can provide the company with more working capital but may strain vendor relationships if extended excessively.
Overall, analyzing these activity ratios for International Flavors & Fragrances Inc. reveals trends in inventory management, accounts receivable efficiency, and payment practices. The company's ability to effectively manage these aspects can impact liquidity, profitability, and overall operational performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.59 | 2.88 | 2.60 | 3.39 | 3.60 |
| Total asset turnover | 0.36 | 0.34 | 0.29 | 0.37 | 0.38 |
International Flavors & Fragrances Inc.'s long-term activity ratios show trends in the efficiency of utilizing fixed assets and total assets over the past five years. The fixed asset turnover ratio has fluctuated, with a peak of 3.71 in 2019 and a low of 2.67 in 2021. This ratio indicates that the company generated $2.71 in revenue for every dollar invested in fixed assets in 2023. The decreasing trend may suggest a decline in the efficiency of utilizing fixed assets to generate sales.
In contrast, the total asset turnover ratio has shown a relatively stable pattern over the same period, ranging from 0.29 in 2021 to 0.39 in 2019. This ratio signifies that the company generated $0.37 in revenue for every dollar invested in total assets in 2023. The consistent performance in total asset turnover implies that the company has been maintaining a relatively stable level of efficiency in generating sales from its total asset base.
Overall, the fixed asset turnover ratio reveals fluctuations in the company's ability to generate sales from its fixed assets, while the total asset turnover ratio indicates a more stable performance in utilizing its total assets to drive revenue. These trends suggest that International Flavors & Fragrances Inc. may need to focus on optimizing its utilization of fixed assets to improve its overall long-term efficiency.