Lear Corporation (LEA)

Short-term

Turnover ratios

Based on the activity ratios provided for Lear Corporation:

1. Inventory Turnover: The inventory turnover ratio measures how efficiently a company manages its inventory. Lear Corporation's inventory turnover has shown a consistent improvement over the years, from 11.37 in 2020 to 13.53 in 2024. This indicates that the company is selling its inventory more frequently, which is a positive sign of efficient inventory management.

2. Receivables Turnover: Unfortunately, specific data for Receivables Turnover was not provided in the information provided. This ratio typically measures how quickly a company collects on its credit sales. Without this data, it's challenging to assess the efficiency of Lear Corporation in collecting its receivables.

3. Payables Turnover: Similarly, the Payables Turnover ratio was not provided in the data. Payables turnover ratio measures how quickly a company pays its suppliers. Without this information, we cannot evaluate how Lear Corporation manages its payables.

4. Working Capital Turnover: The working capital turnover ratio shows how efficiently a company generates sales revenue in relation to its working capital. Lear Corporation's working capital turnover has shown a consistent increase from 10.03 in 2020 to 13.42 in 2024. This indicates that the company is effectively utilizing its working capital to generate sales, which is a positive indicator of operational efficiency.

In conclusion, Lear Corporation has shown strong improvements in its inventory turnover and working capital turnover ratios, indicating efficient management of inventory and working capital. However, without data on receivables turnover and payables turnover, it is challenging to provide a comprehensive analysis of the company's overall efficiency in managing its working capital cycle.

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Average number of days

Lear Corporation's Days of Inventory on Hand (DOH) has shown a consistent decline over the years, from 32.09 days in 2020 to 26.97 days in 2024. This indicates that the company is managing its inventory more efficiently, taking fewer days to sell its inventory. A decreasing trend in DOH is generally seen as positive, as it suggests better inventory management and lower carrying costs.

The Days of Sales Outstanding (DSO) and Number of Days of Payables data are not available for any of the years provided. This lack of information hinders a comprehensive analysis of Lear Corporation's accounts receivable and accounts payable turnover efficiency. Without this data, it is challenging to assess how quickly the company collects its receivables or pays its suppliers.

Overall, based on the available information on DOH, Lear Corporation appears to be effectively managing its inventory levels, which is a positive indicator for the company's operational efficiency and financial health. However, a more detailed analysis incorporating DSO and payables turnover would provide a more complete picture of the company's liquidity and working capital management.

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Long-term

Lear Corporation's fixed asset turnover ratio has shown a positive trend over the past few years, increasing from 6.23 in 2020 to 7.08 in 2021 and further to 7.32 in 2022. This indicates that the company is generating more revenue relative to its investment in fixed assets each year.

However, it is worth noting that the data for 2023 and 2024 is not available, so we cannot analyze the trend for these years. The absence of data for these years may be due to various reasons such as changes in reporting practices or data availability.

Moving on to the total asset turnover ratio, Lear Corporation's performance in utilizing its total assets to generate revenue has been consistently improving. The ratio has increased from 1.29 in 2020 to 1.44 in 2021, further to 1.52 in 2022, and eventually to 1.60 in 2023, showing a positive and increasing trend.

Overall, both the fixed asset turnover and total asset turnover ratios suggest that Lear Corporation has been efficient in utilizing its assets to generate sales revenue. An increasing trend in these ratios generally indicates operational efficiency and effective management of assets in generating revenue.