Quaker Chemical Corporation (KWR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 7.34 | 7.54 | 6.72 | 6.19 | 7.38 |
| Receivables turnover | 4.60 | 4.23 | 4.01 | 4.04 | 3.71 |
| Payables turnover | 8.43 | 9.54 | 9.87 | 7.22 | 7.22 |
| Working capital turnover | 3.70 | 3.36 | 2.96 | 3.55 | 3.38 |
Quaker Chemical Corporation's activity ratios provide insights into how efficiently the company is managing its inventory, receivables, payables, and working capital.
1. Inventory Turnover:
- Quaker Chemical's inventory turnover has been relatively stable over the years, with a slight decrease from 7.38 in 2020 to 6.19 in 2021, followed by an increase to 7.54 in 2023. This indicates that the company is managing its inventory effectively, turning over its inventory approximately 6 to 7 times a year.
2. Receivables Turnover:
- The company's receivables turnover has shown a consistent increase from 3.71 in 2020 to 4.60 in 2024. This upward trend suggests that Quaker Chemical is collecting its accounts receivable more efficiently, converting receivables into cash at a faster rate.
3. Payables Turnover:
- Quaker Chemical's payables turnover ratio fluctuated over the years, ranging from 7.22 in 2020 to 9.87 in 2022. A higher payables turnover ratio indicates that the company is taking longer to pay its suppliers, which could be beneficial for cash flow management.
4. Working Capital Turnover:
- The working capital turnover ratio reflects how efficiently Quaker Chemical is utilizing its working capital to generate sales. The company's working capital turnover has been relatively consistent, hovering around 3.36 to 3.70, implying that the firm is effectively using its assets to drive revenue.
Overall, Quaker Chemical Corporation's activity ratios demonstrate a good balance in managing its inventory, receivables, payables, and working capital to support its operations and financial performance.
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 | 49.72 | 48.43 | 54.31 | 58.97 | 49.46 |
| Days of sales outstanding (DSO) | days | 79.43 | 86.27 | 91.10 | 90.32 | 98.31 |
| Number of days of payables | days | 43.31 | 38.27 | 36.99 | 50.53 | 50.53 |
The analysis of Quaker Chemical Corporation's activity ratios reveals the following trends:
1. Days of Inventory on Hand (DOH): The company's inventory turnover has been fluctuating over the years. From 2020 to 2022, there was an increase in the number of days of inventory on hand, suggesting a potential inefficiency in managing inventory levels. However, by 2023, there was a significant improvement in inventory management, with a decrease in the DOH to 48.43 days. This trend continued in 2024, with the DOH slightly increasing to 49.72 days, indicating a reasonable level of inventory turnover.
2. Days of Sales Outstanding (DSO): Quaker Chemical Corporation's DSO has shown a consistent improvement from 2020 to 2024. The company has been able to collect receivables more efficiently, as evidenced by the decreasing DSO figures. This suggests effective credit management practices and timely collection of sales proceeds, which is a positive indicator for the company's cash flow management.
3. Number of Days of Payables: The days of payables for Quaker Chemical Corporation have shown variability over the years. From 2020 to 2022, there was a significant decrease in the number of days of payables, indicating a shorter period within which the company pays its suppliers. This could potentially strain the company's liquidity position. However, by 2023 and 2024, the number of days of payables increased slightly, moving towards a more balanced approach in managing payables.
Overall, Quaker Chemical Corporation seems to have improved its inventory and receivables management over the years, leading to better operational efficiency and cash flow generation. However, the variability in the days of payables indicates the need for consistent monitoring and optimization of the company's payment practices to maintain a healthy working capital position.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 8.01 | 9.06 | 9.54 | 8.81 | 6.79 |
| Total asset turnover | 0.70 | 0.69 | 0.67 | 0.59 | 0.48 |
Quaker Chemical Corporation's long-term activity ratios show an improving trend over the past five years. The fixed asset turnover ratio has steadily increased from 6.79 in December 2020 to 8.01 in December 2024, indicating that the company is generating more revenue from its fixed assets. This suggests efficient utilization of fixed assets to generate sales.
Similarly, the total asset turnover ratio has also shown a positive trend, increasing from 0.48 in December 2020 to 0.70 in December 2024. This indicates that Quaker Chemical Corporation is generating more sales relative to its total assets, reflecting effective asset management and a higher level of efficiency in generating revenue from its total asset base.
Overall, the improvements in both the fixed asset turnover and total asset turnover ratios suggest that Quaker Chemical Corporation has become more efficient in utilizing its assets to drive sales growth and enhance overall operational performance.