Mercer International Inc (MERC)

Short-term

Turnover ratios

Mercer International Inc.'s activity ratios indicate the efficiency of its operations in managing various aspects of its business.

1. Inventory turnover: The company's inventory turnover has shown a fluctuating trend over the past five years, ranging from 3.49 to 4.92 times. In 2023, the inventory turnover ratio improved to 4.48, suggesting that the company effectively sold and replaced its inventory 4.48 times during the year.

2. Receivables turnover: Mercer International Inc. has maintained a relatively stable receivables turnover ratio between 6.14 and 9.41. A higher ratio indicates that the company is collecting outstanding receivables efficiently. The 2023 ratio of 6.51 indicates that receivables were collected approximately 6.51 times during the year.

3. Payables turnover: The payables turnover ratio has been increasing over the years, reaching 19.38 in 2023. This suggests that the company is taking longer to pay its suppliers, which could either indicate a slowdown in payments or improved negotiation terms with suppliers.

4. Working capital turnover: Mercer International Inc.'s working capital turnover ratio has fluctuated between 2.15 and 2.85. The decline to 2.47 in 2023 indicates that the company generated $2.47 in revenue for each dollar of working capital employed, reflecting a slight decrease in efficiency compared to the previous year.

Overall, Mercer International Inc. has demonstrated varying efficiencies in managing its inventories, receivables, payables, and working capital over the years. Investors and stakeholders may use these ratios to assess the company's operational performance and efficiency in utilizing its resources.

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Average number of days

Activity ratios provide insight into how efficiently a company manages its assets and liabilities to generate revenue.

1. Days of Inventory on Hand (DOH):
- Mercer International Inc.'s DOH has shown fluctuations over the past five years, ranging from 74.23 days to 104.53 days.
- A decreasing trend from 2021 to 2023 indicates the company has been managing its inventory more efficiently.
- The current DOH of 81.56 days suggests that Mercer is maintaining its inventory for approximately 81 days before selling it.

2. Days of Sales Outstanding (DSO):
- DSO measures how quickly the company collects its accounts receivable from customers.
- Mercer's DSO has ranged between 38.79 days and 59.41 days over the past five years.
- The increasing trend from 2019 to 2021 and the subsequent decrease in 2022 and 2023 could imply improvements in the company's credit policies or collection procedures.
- The current DSO of 56.05 days indicates that Mercer takes around 56 days to collect its receivables.

3. Number of Days of Payables:
- This ratio shows how many days on average the company takes to pay its suppliers.
- Mercer's payables period has ranged from 18.83 days to 29.12 days over the past five years.
- A decreasing trend from 2019 to 2023 indicates the company has been paying its suppliers more quickly.
- The current payables period of 18.83 days suggests that Mercer takes approximately 19 days, on average, to pay its suppliers.

In summary, Mercer International Inc. has shown improvements in managing its inventory, collecting receivables, and paying suppliers efficiently over the past few years, as indicated by the trends in its activity ratios. However, further analysis and comparison with industry benchmarks would provide a more comprehensive understanding of the company's operational efficiency.

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Long-term

Mercer International Inc.'s long-term activity ratios indicate the efficiency with which the company utilizes its assets to generate sales.

The fixed asset turnover ratio has exhibited fluctuations over the last five years, ranging from 1.28 to 1.70. This ratio measures how effectively the company is utilizing its fixed assets to generate revenue. A higher fixed asset turnover ratio implies that Mercer is generating more revenue per dollar invested in fixed assets. The decreasing trend from 2022 to 2023 may suggest a decrease in the efficiency of utilizing fixed assets to generate sales.

On the other hand, the total asset turnover ratio has also shown variability but generally exhibits a lower magnitude compared to the fixed asset turnover ratio. The total asset turnover ratio measures the efficiency of the company in using all its assets to generate sales. The 2023 ratio of 0.75 indicates that for every dollar invested in total assets, Mercer is generating $0.75 in sales revenue.

Overall, the fixed asset turnover ratio outperforms the total asset turnover ratio, indicating that Mercer is more efficient in utilizing its fixed assets to generate revenue compared to its total assets. However, there has been some fluctuation in these ratios over the years, indicating changes in the company's asset utilization efficiency. Further analysis and comparison with industry benchmarks could provide more insights into Mercer's performance in utilizing its assets effectively.