Innospec Inc (IOSP)

Payables turnover

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Cost of revenue (ttm) US$ in thousands 1,776,100 1,661,200 1,685,700 1,739,800 1,759,700 1,765,200 1,807,400 1,783,000 1,744,300 1,660,500 1,542,100 1,439,800 1,324,200 1,237,700 1,143,900 1,125,200 1,147,400 1,204,000 1,293,500 1,331,600
Payables US$ in thousands 163,800 169,000 147,700 166,400 163,600 146,100 157,900 177,700 165,300 173,600 180,900 161,800 148,700 137,100 123,500 114,500 98,700 81,800 74,100 108,400
Payables turnover 10.84 9.83 11.41 10.46 10.76 12.08 11.45 10.03 10.55 9.57 8.52 8.90 8.91 9.03 9.26 9.83 11.63 14.72 17.46 12.28

December 31, 2024 calculation

Payables turnover = Cost of revenue (ttm) ÷ Payables
= $1,776,100K ÷ $163,800K
= 10.84

The payables turnover ratio measures the efficiency with which a company manages its payables by comparing the cost of goods sold to the average accounts payable balance. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently.

Analyzing the payables turnover ratio data for Innospec Inc from March 2020 to December 2024, we observe fluctuations in the ratio. The ratio decreased from 12.28 in March 2020 to 8.52 in June 2022, indicating a decline in the efficiency of payables management during this period. However, from June 2022 to December 2024, the ratio increased to 10.84, suggesting an improvement in managing payables.

The downward trend in the payables turnover ratio from March 2020 to June 2022 could be attributed to various factors such as changes in payment terms with suppliers, increased accounts payable balances, or delays in paying suppliers. Conversely, the subsequent upward trend from June 2022 to December 2024 indicates potential enhancements in payables management practices, possibly through better negotiation of payment terms or streamlining of accounts payable processes.

Overall, the fluctuations in Innospec Inc's payables turnover ratio reflect changes in the company's relationships with suppliers and its ability to manage payables efficiently. Further analysis of the underlying factors influencing these fluctuations would provide deeper insights into the company's financial management strategies.