LyondellBasell Industries NV (LYB)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	7.52	7.38	7.35	8.06	9.13	8.82	8.72	8.21	7.63	6.66	5.98	5.43	5.61	6.17	6.92	7.23	6.39	6.74	6.66	7.11
Receivables turnover	86.36	—	11.29	12.19	12.36	12.26	9.90	9.32	8.86	7.86	7.22	7.41	6.18	9.41	11.57	10.99	10.05	10.21	9.81	10.33
Payables turnover	—	—	12.62	13.73	14.12	12.95	10.83	9.64	10.81	9.49	9.95	9.31	10.16	12.27	14.57	12.96	11.65	11.16	12.08	12.25
Working capital turnover	6.85	6.64	7.58	8.63	9.92	11.31	10.31	8.74	9.26	6.28	5.61	5.77	4.53	4.68	4.96	8.02	8.05	15.80	10.38	11.61

The activity ratios of LyondellBasell Industries NV provide insights into the efficiency of the company's operations in managing its inventory, receivables, payables, and working capital:

1. Inventory turnover:
The inventory turnover ratio measures how efficiently LyondellBasell is managing its inventory by indicating how many times the company's inventory is sold and replaced over a specific period. The decreasing trend in the inventory turnover ratio from Q1 2022 to Q4 2023 (9.13 to 7.52) may indicate that the company is holding onto inventory for a longer period, which could tie up capital and lead to potential obsolescence risks.

2. Receivables turnover:
The receivables turnover ratio reflects the effectiveness of LyondellBasell in collecting payments from its customers. The declining trend in the receivables turnover ratio from Q1 2022 to Q4 2023 (12.36 to 10.31) suggests that the company may be taking longer to collect payments from its customers, which could impact cash flows and liquidity.

3. Payables turnover:
The payables turnover ratio represents how efficiently LyondellBasell is managing its accounts payable by measuring how quickly the company pays its suppliers. The declining trend in the payables turnover ratio from Q1 2022 to Q4 2023 (12.24 to 9.40) indicates that the company is taking longer to pay its suppliers. While this may improve cash flow in the short term, it could strain supplier relationships in the long run.

4. Working capital turnover:
The working capital turnover ratio assesses how effectively LyondellBasell is utilizing its working capital to generate sales revenue. The decreasing trend in the working capital turnover ratio from Q1 2022 to Q4 2023 (9.92 to 6.85) may suggest that the company's efficiency in utilizing its working capital to generate sales has declined over time.

Overall, the analysis of LyondellBasell's activity ratios suggests that there may be inefficiencies in managing inventory, collecting receivables, paying suppliers, and utilizing working capital effectively. Management should closely monitor these ratios to improve operational efficiency and maintain healthy liquidity levels.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	48.52	49.43	49.67	45.28	39.99	41.41	41.86	44.48	47.83	54.81	61.02	67.17	65.09	59.20	52.74	50.49	57.15	54.12	54.78	51.34
Days of sales outstanding (DSO)	days	4.23	—	32.34	29.95	29.52	29.77	36.87	39.16	41.20	46.43	50.55	49.27	59.04	38.78	31.55	33.21	36.31	35.74	37.22	35.33
Number of days of payables	days	—	—	28.91	26.59	25.86	28.19	33.69	37.86	33.77	38.44	36.68	39.20	35.93	29.76	25.06	28.17	31.34	32.71	30.21	29.80

Analyzing LyondellBasell Industries NV activity ratios over the past eight quarters reveals trends in its inventory management, accounts receivable collection, and accounts payable payment periods.

1. Days of Inventory on Hand (DOH):
- The company's average DOH has been gradually increasing from Q1 2022 to Q4 2023, indicating that inventory turnover has been slowing down.
- The increase in DOH suggests that the company may be carrying excess inventory, tying up capital and potentially indicating inefficiencies in its production or supply chain management.

2. Days of Sales Outstanding (DSO):
- LyondellBasell's DSO has fluctuated over the quarters, but there is a general decreasing trend seen from Q1 2022 to Q4 2023.
- The reduction in DSO indicates that the company has been collecting its accounts receivable more quickly, which can improve cash flow and liquidity.

3. Number of Days of Payables:
- The trend in the number of days of payables reveals that the company has been steadily improving in extending its payment deadlines to suppliers from Q1 2022 to Q4 2023.
- Extending the payment period can help the company manage its cash flow more effectively by utilizing suppliers' financing to support operations.

In summary, while LyondellBasell has shown improvement in managing its accounts receivable and payables, there are concerns about the increasing days of inventory on hand. The company may need to focus on optimizing its inventory levels to enhance efficiency and reduce working capital tied up in inventory.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	2.64	2.72	2.79	3.09	3.28	3.58	3.63	3.41	3.17	2.78	2.41	2.04	1.93	1.98	2.06	2.32	2.46	2.59	2.77	2.97
Total asset turnover	1.11	1.12	1.17	1.31	1.39	1.45	1.45	1.33	1.26	1.07	0.95	0.82	0.78	0.88	0.95	1.08	1.14	1.18	1.18	1.27

The fixed asset turnover ratio for LyondellBasell Industries NV has been gradually decreasing over the past eight quarters, indicating that the company is generating less revenue from its investment in fixed assets. This trend may suggest that the company is not efficiently utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio has also shown a declining trend over the same period. This indicates that overall, the company is generating less revenue from its total assets. A decreasing total asset turnover ratio could be a sign of inefficiency in the company's overall asset utilization.

In conclusion, both the fixed asset turnover and total asset turnover ratios of LyondellBasell Industries NV have been on a downward trajectory over the past two years, which could indicate potential inefficiencies in the company's asset management and utilization. Further analysis would be needed to determine the specific reasons behind these trends and to assess the company's long-term financial performance.