Innospec Inc (IOSP)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.93 | 5.88 | 4.69 | 4.80 | 5.27 |
| Receivables turnover | 5.40 | 5.42 | 5.87 | 5.21 | 5.39 |
| Payables turnover | 10.90 | 10.79 | 10.60 | 8.96 | 11.75 |
| Working capital turnover | 3.15 | 3.79 | 4.21 | 3.79 | 3.80 |
Innospec Inc's inventory turnover ratio has fluctuated over the years, indicating the efficiency with which the company manages its inventory. The ratio decreased from 5.27 in 2020 to 4.80 in 2021, further declining to 4.69 in 2022 before showing an improvement to 5.88 in 2023 and 5.93 in 2024. This suggests that the company was able to sell its inventory more quickly in the later years compared to the earlier ones.
The receivables turnover ratio remained relatively stable over the period, reflecting how effectively the company collects payments from customers. It was 5.39 in 2020, decreased slightly to 5.21 in 2021, increased to 5.87 in 2022, and then declined to 5.42 in 2023 before settling at 5.40 in 2024.
The payables turnover ratio, which measures how quickly the company pays its suppliers, declined from 11.75 in 2020 to 8.96 in 2021, but then showed some improvement, reaching 10.60 in 2022 and further increasing to 10.79 in 2023 and 10.90 in 2024. This indicates that the company took longer to pay its suppliers in 2021 but gradually improved its payment efficiency in the subsequent years.
The working capital turnover ratio, reflecting how efficiently the company utilizes its working capital to generate sales, fluctuated over the years. It was 3.80 in 2020, remained stable at 3.79 in 2021, increased to 4.21 in 2022, dropped back to 3.79 in 2023, and then decreased further to 3.15 in 2024. This suggests that the company's ability to generate sales using its working capital varied during the period under review.
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 | 61.56 | 62.06 | 77.74 | 76.06 | 69.23 |
| Days of sales outstanding (DSO) | days | 67.58 | 67.39 | 62.19 | 70.00 | 67.78 |
| Number of days of payables | days | 33.50 | 33.83 | 34.44 | 40.74 | 31.06 |
Innospec Inc's activity ratios reflect how efficiently the company manages its inventory, accounts receivable, and accounts payable.
1. Days of Inventory on Hand (DOH): The trend in the DOH ratio indicates the number of days it takes for Innospec to sell its inventory. The DOH increased from 69.23 days in 2020 to 77.74 days in 2022 before decreasing to 61.56 days in 2024. This suggests that the company was carrying more inventory in 2022 compared to 2020, but then managed to reduce its inventory levels by 2024, potentially minimizing storage costs and the risk of obsolescence.
2. Days of Sales Outstanding (DSO): The DSO ratio reflects the average number of days it takes for Innospec to collect its accounts receivable. The DSO remained relatively stable over the years, fluctuating between 62.19 days and 70.00 days. A consistent DSO may indicate effective credit management practices by the company, ensuring timely collection of outstanding receivables.
3. Number of Days of Payables: The number of days of payables ratio represents the average time it takes for Innospec to pay its suppliers. The company increased its payment period from 31.06 days in 2020 to 40.74 days in 2021 before gradually reducing it to 33.50 days in 2024. Extending payment periods can provide the company with additional liquidity and enhance cash flow management, although excessively delaying payments may strain supplier relationships.
Overall, Innospec's activity ratios suggest a mixed performance in managing its working capital components. The company improved its inventory management efficiency and reduced its payables period, but maintained a consistent collection period for accounts receivable. Monitoring these ratios can help evaluate the company's operational effectiveness and identify areas for further improvement.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.84 | 7.26 | 8.89 | 6.92 | 5.66 |
| Total asset turnover | 1.06 | 1.14 | 1.22 | 0.94 | 0.85 |
The fixed asset turnover ratio for Innospec Inc has been progressively increasing over the years, reflecting the company's ability to generate revenue from its fixed assets efficiently. The ratio was 5.66 in 2020, improved to 6.92 in 2021, further increased to 8.89 in 2022, but then dropped to 7.26 in 2023 before stabilizing at 6.84 in 2024.
In terms of total asset turnover, the company's efficiency in utilizing all assets to generate sales has also shown an upward trend. The total asset turnover ratio was 0.85 in 2020, rose to 0.94 in 2021, increased notably to 1.22 in 2022, slightly decreased to 1.14 in 2023, and settled at 1.06 in 2024.
Overall, the trends in both fixed asset turnover and total asset turnover ratios demonstrate that Innospec Inc has been effectively leveraging its assets to drive sales and productivity over the last five years, albeit with some fluctuations in certain periods.