Martin Marietta Materials Inc (MLM)

Short-term

Turnover ratios

The activity ratios for Martin Marietta Materials, Inc. provide insights into the efficiency and effectiveness of the company's operations over the past five years.

1. Inventory Turnover:
Inventory turnover measures how many times a company sells and replaces its inventory within a specific period. A higher ratio generally indicates that inventory is being managed effectively. Martin Marietta Materials, Inc.'s inventory turnover has seen some fluctuation but has remained relatively stable between 4.81 and 5.42 over the past five years. This suggests that the company is efficiently managing its inventory levels.

2. Receivables Turnover:
Receivables turnover measures how many times a company collects its accounts receivable within a specific period. A higher ratio indicates that the company is collecting payments from customers in a timely manner. Martin Marietta Materials, Inc. has shown varying levels in receivables turnover, ranging from 6.99 to 9.00. This indicates some fluctuations in the efficiency of the company's credit and collection policies.

3. Payables Turnover:
Payables turnover measures how quickly a company pays its suppliers. A higher ratio typically indicates that the company is managing its payables effectively. Martin Marietta Materials, Inc. has maintained a payables turnover ratio between 11.41 and 16.73 over the past five years, suggesting that the company is managing its payables efficiently.

4. Working Capital Turnover:
Working capital turnover measures how efficiently a company utilizes its working capital to generate sales. A higher ratio indicates that the company is effectively using its resources to drive revenue. Martin Marietta Materials, Inc.'s working capital turnover has shown significant variations, ranging from 2.47 to 8.06. This suggests changes in the company's working capital management and its ability to generate sales from its current assets.

Overall, Martin Marietta Materials, Inc. has demonstrated relatively efficient operational performance based on its activity ratios, with some fluctuations observed in receivables turnover and working capital turnover. The company's inventory and payables management appear to be consistent and effective.

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Average number of days

Based on the activity ratios of Martin Marietta Materials, Inc. over the past five years:

1. Days of Inventory on Hand (DOH):
- The company's days of inventory on hand have shown some fluctuation but have generally been within a range of 67 to 76 days over the past five years.
- A higher number of days of inventory on hand could indicate slower inventory turnover or excess inventory levels, possibly leading to increased storage costs or the risk of obsolescence.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding have ranged from 40 to 52 days during the period under review.
- A lower number of days of sales outstanding is generally favorable as it indicates faster collection of accounts receivable, improving cash flow and reducing the risk of bad debts.

3. Number of Days of Payables:
- The number of days of payables has fluctuated between 22 and 32 days over the past five years.
- A higher number of days of payables may suggest that the company is taking longer to pay its suppliers, potentially straining supplier relationships or indicating financial stress.

Overall, the company's activity ratios suggest that it has managed its inventory levels within a reasonable range, but there could be opportunities to improve its collection of receivables and payables management for better cash flow and working capital management.

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Long-term

The fixed asset turnover ratio for Martin Marietta Materials, Inc. has been steadily increasing over the past five years, from 0.91 in 2019 to 1.10 in 2023. This indicates that the company is generating more revenue for each dollar invested in fixed assets, which is a positive sign of operational efficiency and asset utilization.

On the other hand, the total asset turnover ratio has shown some fluctuation but has generally been lower compared to the fixed asset turnover ratio. It decreased from 0.47 in 2019 to 0.45 in 2023. This suggests that the company is generating less revenue relative to its total assets, which could be due to various factors such as increased investment in non-operating assets or slower sales growth.

Overall, the increasing trend in the fixed asset turnover ratio indicates that Martin Marietta Materials, Inc. is effectively utilizing its fixed assets to generate revenue. However, the lower total asset turnover ratio suggests that the company may need to focus on optimizing its use of total assets to improve overall efficiency and profitability.