LyondellBasell Industries NV (LYB)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	7.52	9.13	7.63	5.61	6.39
Receivables turnover	86.36	12.36	8.86	6.18	10.05
Payables turnover	—	14.12	10.81	10.16	11.65
Working capital turnover	6.85	9.92	9.26	4.53	8.05

Activity ratios are crucial in assessing a company's efficiency in managing its operating assets and liabilities. Let's analyze LyondellBasell Industries NV's activity ratios over the past five years based on the provided data:

1. Inventory Turnover: This ratio indicates how effectively the company is managing its inventory. A higher turnover ratio implies that the company is selling its products more efficiently. LyondellBasell's inventory turnover has fluctuated over the years, with the highest turnover reported in 2022 (9.13) and the lowest in 2020 (5.61). Overall, the company's inventory turnover has been relatively stable during the period under review.

2. Receivables Turnover: The receivables turnover ratio measures how quickly a company collects cash from its customers. A higher turnover ratio implies better efficiency in collecting receivables. LyondellBasell's receivables turnover has varied over the years, with the highest turnover in 2022 (12.36) and the lowest in 2020 (6.18). The company has shown overall efficiency in collecting cash from its customers during the period analyzed.

3. Payables Turnover: The payables turnover ratio assesses how quickly a company pays off its suppliers. A higher turnover ratio indicates that the company is managing its payables effectively. LyondellBasell's payables turnover has fluctuated over the years, with the highest turnover reported in 2022 (12.24) and the lowest in 2020 (8.26). The company has maintained relatively stable performance in managing its payables during the period studied.

4. Working Capital Turnover: This ratio measures how efficiently a company utilizes its working capital to generate sales. A higher turnover ratio suggests effective utilization of working capital. LyondellBasell's working capital turnover has varied over the years, with the highest turnover in 2022 (9.92) and the lowest in 2020 (4.53). The company has demonstrated efficient utilization of working capital to generate sales, with fluctuations observed across the years.

In conclusion, LyondellBasell Industries NV has shown varying levels of efficiency in managing its operating assets and liabilities as reflected in its activity ratios over the past five years. The company's performance in inventory management, receivables collection, payables management, and working capital utilization has been relatively stable, with some fluctuations observed across the period. Monitoring these activity ratios can provide valuable insights into the company's operational efficiency and financial 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	48.52	39.99	47.83	65.09	57.15
Days of sales outstanding (DSO)	days	4.23	29.52	41.20	59.04	36.31
Number of days of payables	days	—	25.86	33.77	35.93	31.34

Activity ratios provide insight into how efficiently a company manages its assets and operations.

1. Days of Inventory on Hand (DOH):
- The trend in DOH for LyondellBasell Industries NV has been fluctuating over the past five years, with a low of 39.99 days in 2022 and a high of 65.09 days in 2020.
- A higher DOH indicates that the company is holding onto inventory for a longer period before selling it, which could tie up working capital and increase storage costs.
- The increase in DOH in 2023 compared to the previous year suggests that the company may be experiencing difficulties in managing its inventory efficiently.

2. Days of Sales Outstanding (DSO):
- DSO measures how long it takes for the company to collect payments from its customers.
- LyondellBasell Industries NV has shown variability in DSO, with the lowest value of 29.52 days in 2022 and the highest value of 59.04 days in 2020.
- A higher DSO indicates that the company is taking longer to collect payments, which could result in cash flow challenges and increased credit risk.
- The significant increase in DSO in 2020 and the decrease in 2023 may indicate changes in the company's credit policies or customer payment behaviors.

3. Number of Days of Payables:
- This ratio reflects how long the company takes to pay its suppliers.
- LyondellBasell Industries NV has maintained a relatively stable trend in the number of days of payables over the past five years.
- A longer payment period suggests that the company is using its suppliers' financing for operational activities, which can improve cash flow but may strain supplier relationships.
- The increase in the number of days of payables in 2023 compared to the previous year may indicate a shift towards extending payment terms or negotiating better payment conditions with suppliers.

In conclusion, LyondellBasell Industries NV should continue to monitor and manage its activity ratios to ensure efficient asset utilization, cash flow management, and healthy supplier relationships.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	2.64	3.28	3.17	1.93	2.46
Total asset turnover	1.11	1.39	1.26	0.78	1.14

The fixed asset turnover ratio for LyondellBasell Industries NV has shown fluctuations over the past five years, ranging from 1.93 to 3.28. This ratio indicates the company's efficiency in generating sales revenue from its investment in fixed assets. The declining trend in recent years suggests that the company may be less efficient in utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio has also exhibited variability, with values ranging from 0.78 to 1.39. This ratio reflects the company's ability to generate sales in relation to its total assets. The fluctuations observed in this ratio may indicate changes in the company's sales generation efficiency over the years.

In comparing the two ratios, it is evident that the fixed asset turnover ratio is consistently higher than the total asset turnover ratio. This implies that fixed assets contribute more significantly to the company's sales generation than total assets as a whole. However, the declining trend in fixed asset turnover suggests a need for the company to reassess its utilization of fixed assets to enhance operational efficiency and maximize revenue generation.