Martin Marietta Materials Inc (MLM)

Short-term

Turnover ratios

Martin Marietta Materials, Inc.'s activity ratios provide insight into how efficiently the company manages its assets and liabilities to generate revenue.

1. Inventory turnover: The inventory turnover ratio measures how many times a company sells and replaces its inventory during a period. Martin Marietta Materials, Inc.'s inventory turnover has slightly decreased from Q4 2022 to Q4 2023, indicating that the company may be holding onto inventory for a slightly longer period. It is essential for the company to monitor and manage its inventory levels effectively to avoid overstocking and obsolescence.

2. Receivables turnover: The receivables turnover ratio reflects how effectively a company collects payments from its customers. Martin Marietta Materials, Inc.'s receivables turnover has shown some fluctuations over the periods, with a significant increase in Q4 2023 compared to previous quarters. This suggests that the company has improved its collection efficiency, possibly by implementing stricter credit policies or following up more promptly on outstanding invoices.

3. Payables turnover: The payables turnover ratio measures how efficiently a company pays its suppliers. Martin Marietta Materials, Inc.'s payables turnover has been relatively stable, with a slight increase in Q1 2023 compared to Q4 2022. A higher payables turnover ratio indicates that the company is managing its trade credit effectively, potentially taking advantage of favorable credit terms or discounts.

4. Working capital turnover: The working capital turnover ratio assesses how efficiently a company utilizes its working capital to generate sales. Martin Marietta Materials, Inc.'s working capital turnover has fluctuated over the periods, with a notable decrease in Q4 2023 compared to the previous quarter. A higher working capital turnover ratio indicates that the company is effectively using its current assets to support its operations and generate revenue.

In conclusion, Martin Marietta Materials, Inc. should continue monitoring and optimizing its activity ratios to ensure efficient management of its assets and liabilities, which ultimately impacts its overall operational performance and financial health.

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Average number of days

Martin Marietta Materials, Inc.'s activity ratios indicate how efficiently the company manages its inventory, accounts receivable, and accounts payable.

1. Days of Inventory on Hand (DOH): The trend in DOH shows an increase from Q4 2022 to Q4 2023, peaking at 75.89 days. This suggests that the company is holding inventory for a longer period. A higher DOH may indicate potential issues with inventory management, such as overstocking or slow-moving inventory.

2. Days of Sales Outstanding (DSO): The DSO fluctuated over the quarters, with a significant spike in Q3 2023. This increase could be a concern as it indicates that it is taking the company longer to collect payments from its customers. A high DSO may affect the company's cash flow and liquidity.

3. Number of Days of Payables: The days of payables remained relatively stable across the quarters, with a slight decrease in Q1 2023. A lower number of days of payables indicates that the company is paying its suppliers more quickly. While this may be beneficial in maintaining good relationships with suppliers, excessive reduction in payables could strain cash flow.

Overall, Martin Marietta Materials, Inc. should closely monitor its activity ratios to ensure efficient management of inventory, receivables, and payables to optimize working capital and improve overall financial performance. Tracking these metrics can help the company identify potential operational inefficiencies and take corrective actions to enhance profitability and financial health.

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Long-term

The fixed asset turnover ratio for Martin Marietta Materials, Inc. has shown a generally increasing trend over the past eight quarters, indicating that the company is generating more revenue from its fixed assets compared to previous periods. This suggests that the company is effectively utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio has remained relatively stable over the same period, fluctuating around the 0.42 mark. This indicates that the company has been consistent in generating sales relative to its total assets, although there hasn't been a significant improvement in this area.

Overall, the improvement in the fixed asset turnover ratio suggests that Martin Marietta Materials, Inc. is becoming more efficient in utilizing its fixed assets to generate revenue, which could potentially lead to improved profitability in the long run. However, the stability of the total asset turnover ratio indicates that there may be room for further optimization in utilizing the company's total assets to increase sales.