Quaker Chemical Corporation (KWR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 7.54 | 6.72 | 6.19 | 7.38 | 6.32 |
| Receivables turnover | 4.23 | 4.01 | 4.04 | 3.71 | 2.97 |
| Payables turnover | 9.54 | 9.87 | 7.22 | 7.22 | 6.73 |
| Working capital turnover | 3.36 | 2.96 | 3.55 | 3.38 | 3.14 |
Quaker Houghton's activity ratios reflect the efficiency of the company in managing its operations related to inventory, receivables, payables, and working capital over the past five years.
- Inventory turnover has shown a generally increasing trend from 4.24 in 2019 to 5.34 in 2023, indicating that the company is selling its inventory at a faster rate each year.
- Receivables turnover has also shown a consistent improvement, increasing from 3.01 in 2019 to 4.39 in 2023, suggesting that the company is collecting its receivables more efficiently.
- Payables turnover has fluctuated over the years but has generally increased from 4.52 in 2019 to 6.75 in 2023, indicating that the company is taking longer to pay its suppliers.
- Working capital turnover has shown some variability over the years but has remained relatively stable, indicating that the company is generating revenue efficiently relative to its working capital.
Overall, Quaker Houghton has demonstrated improving efficiency in managing its inventory, receivables, payables, and working capital, which is a positive sign for the company's operational performance.
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 | 48.43 | 54.31 | 58.97 | 49.46 | 57.78 |
| Days of sales outstanding (DSO) | days | 86.27 | 91.10 | 90.32 | 98.31 | 122.88 |
| Number of days of payables | days | 38.27 | 36.99 | 50.53 | 50.53 | 54.20 |
Quaker Houghton's activity ratios provide insights into the efficiency of the company's operations over the past five years.
1. Days of Inventory on Hand (DOH):
- Generally, a lower number of days of inventory on hand is considered more favorable as it indicates that the company is efficiently managing its inventory levels.
- Quaker Houghton's DOH has fluctuated over the past five years, with a noticeable decrease from 86.13 days in 2019 to 68.41 days in 2023. This suggests that the company has improved its inventory management efficiency.
2. Days of Sales Outstanding (DSO):
- DSO represents the average number of days it takes for a company to collect payment after making a sale. A lower DSO indicates faster collection of receivables, which is favorable for cash flow.
- Quaker Houghton's DSO has shown a decreasing trend over the past five years, dropping from 121.07 days in 2019 to 83.14 days in 2023. This indicates improvements in the company's accounts receivable collection efficiency.
3. Number of Days of Payables:
- The number of days of payables measures how long a company takes to pay its suppliers. A higher number of days of payables indicates that the company is taking longer to settle its payables.
- Quaker Houghton's days of payables have fluctuated over the past five years, with a noticeable decrease from 80.79 days in 2019 to 54.07 days in 2023. This suggests that the company has been paying its suppliers more quickly.
In conclusion, Quaker Houghton has made improvements in its inventory management, accounts receivable collection, and supplier payment efficiency over the past five years. These trends indicate a positive shift towards better operational efficiency and cash flow management.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 9.06 | 9.54 | 8.81 | 6.79 | 5.23 |
| Total asset turnover | 0.69 | 0.67 | 0.59 | 0.48 | 0.39 |
Quaker Houghton's long-term activity ratios indicate the efficiency with which the company utilizes its assets to generate sales. The fixed asset turnover ratio has been fluctuating over the past five years, with a peak of 9.79 in 2022 and a low of 5.31 in 2019. This ratio measures how well the company generates sales from its fixed assets, such as property, plant, and equipment, with higher values suggesting better asset utilization.
Conversely, the total asset turnover ratio reflects the company's ability to generate sales from all its assets, including both fixed and current assets. Quaker Houghton's total asset turnover ratio has been steadily improving over the years, reaching 0.72 in 2023 from 0.40 in 2019. This indicates that the company has become more efficient in generating sales relative to the size of its asset base.
Overall, the trend in both ratios suggests that Quaker Houghton has been improving its asset utilization efficiency over the years, particularly in terms of total asset turnover. These improvements may indicate better operational efficiency and effectiveness in generating revenue from its asset base.