Louisiana-Pacific Corporation (LPX)

Short-term

Turnover ratios

Louisiana-Pacific Corporation's activity ratios indicate varying levels of efficiency in managing its resources over the years.

1. Inventory Turnover: The company's inventory turnover has generally been in the range of 5 to 7 times per year, indicating that it is able to sell and replace its inventory effectively. However, there was a slight decrease in 2024 compared to the previous year, which might suggest a slower rate of inventory turnover or holding excess inventory.

2. Receivables Turnover: Louisiana-Pacific Corporation's receivables turnover has shown significant improvement over the years, indicating the company's ability to collect outstanding payments from customers efficiently. The sharp increase from 2020 to 2022 is particularly noteworthy, suggesting improved credit and collection policies.

3. Payables Turnover: The data provided does not include payables turnover information, which would have been helpful in assessing how quickly the company pays its suppliers. It's essential to consider the payables turnover ratio in conjunction with others to get a complete picture of the company's financial activities.

4. Working Capital Turnover: The company's working capital turnover has shown fluctuations but generally remained above 4 times. This suggests that Louisiana-Pacific Corporation is effectively utilizing its working capital to generate sales revenue. The increase in turnover from 2020 to 2022 indicates improved efficiency in utilizing its current assets to generate sales.

Overall, Louisiana-Pacific Corporation has demonstrated efficiency in managing its working capital and receivables turnover, but there may be areas for improvement in terms of inventory management and payables turnover, although payables turnover data is not available in the provided information.

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Average number of days

Analyzing the activity ratios of Louisiana-Pacific Corporation based on the provided data:

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, a company holds its inventory before selling it.
- Louisiana-Pacific Corporation's DOH decreased from 60.37 days in 2020 to 51.98 days in 2021, indicating an improvement in inventory management.
- In 2022 and 2024, the DOH remained relatively stable at 52.21 days and 61.79 days, respectively.
- However, in 2023, there was a noticeable increase in DOH to 69.40 days, suggesting a potential issue with inventory management efficiency during that year.

2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects how many days on average it takes a company to collect its accounts receivable.
- Louisiana-Pacific Corporation's DSO decreased significantly from 27.99 days in 2020 to 15.76 days in 2021, showing a more efficient collection of receivables.
- The trend continued with lower DSO of 12.03 days in 2022 and 16.26 days in 2024, indicating effective credit and collection policies.
- However, there was an increase in DSO to 21.92 days in 2023, which suggests a slight deterioration in the company's credit management during that year.

3. Number of Days of Payables:
- The data provided does not include the number of days of payables for Louisiana-Pacific Corporation, indicating that specific information on this aspect is not available for analysis.
- Without the payables data, a comprehensive assessment of the company's complete working capital cycle efficiency cannot be provided.

Overall, based on the available activity ratio data, Louisiana-Pacific Corporation appears to have shown improvements in inventory management and receivables collection over the years. However, the increase in inventory holding days and DSO in 2023 warrant further investigation to identify potential inefficiencies and areas of improvement in the company's working capital management.

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Long-term

The fixed asset turnover ratio reflects how efficiently a company utilizes its fixed assets to generate revenue. Louisiana-Pacific Corporation's fixed asset turnover has varied over the years, starting at 2.61 in 2020 and peaking at 3.77 in 2021 before decreasing to 1.68 in 2023 and then slightly recovering to 1.85 in 2024.

The trend suggests that the company was able to generate more revenue relative to its fixed assets in 2021 compared to the other years. However, the decline in the fixed asset turnover ratio in 2023 indicates a decrease in efficiency in utilizing fixed assets to generate sales. The slight improvement in 2024 shows some recovery but still remains below the peak in 2021.

Total asset turnover measures the company's ability to generate revenue from its total assets. Louisiana-Pacific Corporation's total asset turnover ratio also fluctuates over the years, starting at 1.15 in 2020, peaking at 1.78 in 2021, and then decreasing to 1.06 in 2023 before rising slightly to 1.14 in 2024.

The total asset turnover ratio follows a similar pattern to the fixed asset turnover ratio, indicating that the company was more effective in generating sales relative to its total assets in 2021 but faced a decline in efficiency in 2023. The slight improvement in 2024 shows some recovery but remains lower than 2021.

In conclusion, while there have been fluctuations in both the fixed asset turnover and total asset turnover ratios for Louisiana-Pacific Corporation, the company should focus on enhancing its efficiency in utilizing both fixed and total assets to generate revenue effectively in the upcoming years.