Lumen Technologies Inc (LUMN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 166.63 | 88.43 | 161.64 | 215.15 | 301.37 |
| Receivables turnover | 8.93 | 11.33 | 12.09 | 10.05 | 9.27 |
| Payables turnover | 30.71 | 19.99 | 20.47 | 19.92 | 18.35 |
| Working capital turnover | 11.73 | 31.55 | 4.51 | — | — |
Lumen Technologies Inc's activity ratios provide valuable insights into the company's operational efficiency and effectiveness in managing its resources.
1. Inventory Turnover:
- Lumen's inventory turnover has been consistently high over the past five years, indicating that the company efficiently manages its inventory levels and quickly sells its products. The decreasing trend from 2021 to 2023 suggests that Lumen may have optimized its inventory management processes.
2. Receivables Turnover:
- The receivables turnover ratio measures how efficiently the company collects payments from its customers. Lumen's receivables turnover has shown a fluctuating pattern, but overall, it has remained at a moderate level. The decreasing trend may indicate that Lumen is taking longer to collect payments from its customers, which could impact its cash flow.
3. Payables Turnover:
- The payables turnover ratio reflects how quickly a company pays its suppliers. Lumen's payables turnover has varied over the years, with a notable decrease from 2022 to 2023. A lower payables turnover may indicate that Lumen is taking longer to pay its suppliers, which could strain relationships or impact access to credit.
4. Working Capital Turnover:
- The working capital turnover ratio measures how effectively a company utilizes its working capital to generate sales. Lumen's working capital turnover has fluctuated significantly, with a notably high value in 2022. The absence of data for 2020 and the declining trend from 2021 to 2023 suggest potential changes in Lumen's working capital management strategies.
Overall, while Lumen Technologies Inc has generally demonstrated efficiency in inventory management, there are areas, such as receivables and payables turnover, that may require closer monitoring to ensure optimal cash flow and 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 | 2.19 | 4.13 | 2.26 | 1.70 | 1.21 |
| Days of sales outstanding (DSO) | days | 40.87 | 32.20 | 30.18 | 36.30 | 39.36 |
| Number of days of payables | days | 11.89 | 18.26 | 17.83 | 18.32 | 19.89 |
Lumen Technologies Inc's activity ratios provide insights into the efficiency of the company's operations.
1. Days of Inventory on Hand (DOH):
- Lumen's DOH has increased from 3.80 days in 2019 to 10.68 days in 2023. This suggests that the company is holding inventory for a longer period, which may indicate slower inventory turnover or excess inventory levels.
- The increase in DOH could be due to changes in demand patterns, supply chain disruptions, or inventory management issues that need to be addressed.
2. Days of Sales Outstanding (DSO):
- The DSO for Lumen has fluctuated over the years, ranging from 30.70 days in 2021 to 36.81 days in 2019. In 2023, the DSO stands at 33.05 days.
- A higher DSO indicates that the company is taking longer to collect its accounts receivable, potentially affecting its cash flow. Lumen should focus on improving its credit policies and collection processes to reduce DSO.
3. Number of Days of Payables:
- Lumen's number of days of payables have varied, with an increasing trend from 32.60 days in 2021 to 57.94 days in 2023. This suggests that the company is taking longer to pay its suppliers.
- Extending payment periods can help improve cash flow, but it may strain relationships with suppliers if not managed effectively. Lumen should monitor its payables closely to ensure timely payments while maintaining positive supplier relationships.
In conclusion, Lumen Technologies Inc needs to address the increasing DOH, manage DSO effectively to optimize cash flow, and carefully balance payables to maintain good supplier relationships while managing liquidity. Monitoring and improving these activity ratios can help drive operational efficiency and financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.74 | 0.91 | 0.94 | 0.79 | 0.82 |
| Total asset turnover | 0.43 | 0.38 | 0.34 | 0.35 | 0.33 |
The fixed asset turnover ratio measures the company's ability to generate sales revenue from its investment in fixed assets. For Lumen Technologies Inc, the fixed asset turnover ratio has been fluctuating over the past five years. It decreased from 0.86 in 2019 to 0.74 in 2023. This decline indicates that the company is less efficient in generating sales from its fixed assets in recent years.
On the other hand, the total asset turnover ratio reflects the efficiency of the company in utilizing all its assets to generate sales. Lumen Technologies Inc's total asset turnover ratio has been relatively low, ranging from 0.34 to 0.43 over the last five years. This suggests that the company is less effective in generating sales revenue compared to the total assets it holds.
In conclusion, both the fixed asset turnover and total asset turnover ratios indicate that Lumen Technologies Inc may need to improve its operational efficiency in utilizing its assets to generate sales revenue. The declining trend in fixed asset turnover and the consistently low total asset turnover ratios raise concerns about the company's asset management and operational effectiveness over the years.