Innospec Inc (IOSP)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.88 | 4.69 | 4.80 | 5.27 | 5.53 |
| Receivables turnover | 5.42 | 5.87 | 5.21 | 5.39 | 5.18 |
| Payables turnover | 10.79 | 10.60 | 8.96 | 11.75 | 11.09 |
| Working capital turnover | 3.79 | 4.21 | 3.79 | 3.80 | 4.63 |
Innospec Inc's activity ratios provide insights into its efficiency in managing its operational resources.
- Inventory turnover has shown a fluctuating trend over the past five years, with a peak in 2023 at 4.52 times. This indicates that the company's ability to manage and sell its inventory has improved from the previous year.
- Receivables turnover has also been variable but generally consistent, with a high of 5.87 in 2022. This ratio indicates how quickly the company is able to collect payments from its customers, which has fluctuated but remains relatively stable.
- Payables turnover has shown some variability but stayed within a narrow range, peaking at 8.62 in 2020. This ratio reflects how effectively the company manages its trade payables, with a higher turnover generally indicating a more efficient payment cycle.
- Working capital turnover has decreased over the past five years, dipping to 3.79 in 2021. This ratio reflects how efficiently the company's working capital is being used to generate revenue. The decrease over the years may suggest a less efficient utilization of working capital in generating sales.
Overall, while the inventory turnover and payables turnover ratios show some positive signs of efficiency improvement, the working capital turnover ratio indicates a potential area for Innospec Inc to focus on for enhancing operational efficiency and maximizing its resources.
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 | 62.06 | 77.74 | 76.06 | 69.23 | 66.00 |
| Days of sales outstanding (DSO) | days | 67.39 | 62.19 | 70.00 | 67.78 | 70.48 |
| Number of days of payables | days | 33.83 | 34.44 | 40.74 | 31.06 | 32.92 |
Innospec Inc's activity ratios show some fluctuations over the past five years.
Days of inventory on hand (DOH) decreased from 98.90 days in 2022 to 80.68 days in 2023, indicating that the company is managing its inventory more efficiently. However, it is worth noting that in 2023 inventory turnover was still higher compared to 2019 and 2020.
Days of sales outstanding (DSO) varied between 62.19 days in 2022 and 70.43 days in 2019, with a decrease to 67.39 days in 2023. This implies that the company is collecting its accounts receivable quicker, which is a positive sign for liquidity and cash flow.
The number of days of payables remained relatively stable, ranging from 42.36 days in 2020 to 51.76 days in 2021. In 2023, the days of payables were 43.98 days, suggesting that the company continues to take around the same time to pay its trade payables.
Overall, Innospec Inc's activity ratios indicate improvements in inventory management and accounts receivable collection efficiency. However, the stability in the number of days of payables suggests a consistent payment policy towards trade creditors. The company should continue to monitor and optimize its working capital management processes to enhance operational efficiency and financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 7.26 | 8.89 | 6.92 | 5.66 | 7.61 |
| Total asset turnover | 1.14 | 1.22 | 0.94 | 0.85 | 1.03 |
Innospec Inc's long-term activity ratios provide insight into how efficiently the company is utilizing its assets to generate revenue. The fixed asset turnover ratio has shown a fluctuating trend over the past five years, with a peak in 2022 at 8.89 and a low in 2021 at 6.92. This ratio measures the company's ability to generate sales from its investments in fixed assets, such as property, plant, and equipment. A higher fixed asset turnover ratio indicates that the company is effectively utilizing its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio has also exhibited variability over the same period, with a peak in 2022 at 1.22 and a low in 2020 at 0.85. This ratio reflects how efficiently the company is using all of its assets to generate sales. A higher total asset turnover ratio implies that the company is generating more revenue per dollar of assets.
Overall, while the fixed asset turnover ratio indicates that Innospec Inc has been efficient in generating sales from its investments in fixed assets, the fluctuating trend suggests some variability in this aspect. The total asset turnover ratio, on the other hand, shows a similar pattern of variability but indicates the company's overall effectiveness in utilizing all of its assets to generate revenue. Further analysis and comparison with industry benchmarks would provide a clearer understanding of Innospec Inc's long-term activity efficiency.