Louisiana-Pacific Corporation (LPX)

Short-term

Turnover ratios

In examining Louisiana-Pacific Corp.'s activity ratios, we observe the following trends:

1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently the company manages its inventory. A higher ratio signifies faster sales of inventory.
- Louisiana-Pacific Corp.'s inventory turnover has been fluctuating over the past five years, ranging from a low of 5.26 in 2023 to a high of 7.66 in 2021. This suggests some variability in the company's inventory management efficiency.

2. Receivables Turnover:
- The receivables turnover ratio indicates how effectively the company collects outstanding receivables from customers. A higher ratio implies quicker collection.
- Louisiana-Pacific Corp.'s receivables turnover has shown significant variability, with a peak of 30.35 in 2022 and a lower ratio of 14.09 in 2019. This may suggest changes in the company's credit and collection policies.

3. Payables Turnover:
- Payables turnover measures how efficiently the company pays its suppliers. A higher ratio indicates faster payment.
- Louisiana-Pacific Corp.'s payables turnover has remained relatively stable over the years, with values fluctuating between 12.99 and 15.80. This indicates consistent payment practices with suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio evaluates how effectively the company utilizes its working capital to generate sales.
- Louisiana-Pacific Corp.'s working capital turnover has varied significantly, with a notable increase from 3.94 in 2020 to 8.43 in 2021 before declining to 4.97 in 2023. This suggests fluctuations in the company's ability to convert working capital into sales.

Overall, the analysis of these activity ratios indicates that Louisiana-Pacific Corp. has experienced varying levels of efficiency in managing its inventory, receivables, payables, and working capital over the past five years. It is essential for the company to monitor these ratios closely to ensure optimal operational performance and cash flow management.

---

Average number of days

Louisiana-Pacific Corp.'s activity ratios reflect its efficiency in managing inventory, collecting receivables, and paying creditors.

1. Days of Inventory on Hand (DOH): The company's days of inventory on hand have increased over the years, indicating that it is taking longer to turn inventory into sales. This could suggest potentially inefficient inventory management or a slowdown in sales. The increase from 48.19 days in 2019 to 69.40 days in 2023 is a significant jump.

2. Days of Sales Outstanding (DSO): Louisiana-Pacific Corp.'s days of sales outstanding have fluctuated over the years but generally show an increasing trend. This suggests that the company is taking longer to collect receivables from customers. The increase from 25.91 days in 2019 to 21.92 days in 2023 indicates an improvement in this aspect.

3. Number of Days of Payables: The number of days of payables has also varied over the years, with some fluctuations. The company seems to be taking slightly longer to pay its creditors compared to previous years. The increase from 23.10 days in 2019 to 25.89 days in 2023 suggests a shift in payment patterns.

Overall, the company's activity ratios point towards potential challenges in managing inventory efficiently. While there have been improvements in collecting receivables, the increasing trend in days of inventory on hand may require further evaluation to enhance operational efficiency and maintain healthy cash flows.

---

Long-term

The long-term activity ratios for Louisiana-Pacific Corp. provide insights into the efficiency of the company's utilization of its fixed assets and total assets over a five-year period.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how effectively a company generates sales revenue from its investment in fixed assets, such as property, plant, and equipment.
- Louisiana-Pacific Corp.'s fixed asset turnover ratio has shown fluctuations over the years, ranging from 1.64 in 2023 to 3.95 in 2021.
- A higher fixed asset turnover ratio indicates that the company is efficiently utilizing its fixed assets to generate sales revenue. In this case, the company experienced its peak performance in 2021.
- The decline in the fixed asset turnover ratio in 2023 may suggest a decrease in the efficiency of generating sales from fixed assets compared to the previous year.

2. Total Asset Turnover:
- The total asset turnover ratio measures how efficiently a company generates sales revenue from its total assets, including both fixed and current assets.
- Louisiana-Pacific Corp.'s total asset turnover ratio has also exhibited fluctuations, with values ranging from 1.06 in 2023 to 2.07 in 2021.
- The trend in the total asset turnover ratio generally follows that of the fixed asset turnover ratio, with both ratios peaking in 2021.
- A higher total asset turnover ratio indicates that the company is effectively utilizing its total assets to generate sales revenue. However, the lower ratio in 2023 may suggest a decreased efficiency in generating sales compared to the previous year.

Overall, Louisiana-Pacific Corp. has shown varying levels of efficiency in generating sales revenue from its fixed assets and total assets over the years. The fluctuations in both fixed asset turnover and total asset turnover ratios indicate potential changes in the company's asset utilization strategies and operational performance. Further analysis and comparison with industry benchmarks may provide additional insights into the company's long-term activity efficiency.