Altria Group (MO)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 8.40 | 5.37 | 5.85 | 6.90 | 3.23 |
| Receivables turnover | 330.90 | 500.79 | 514.94 | 182.07 | 156.78 |
| Payables turnover | 17.53 | 11.47 | 15.57 | 35.68 | 22.82 |
| Working capital turnover | — | — | — | — | — |
Inventory turnover is a measure of how efficiently Altria Group Inc. manages its inventory. The trend shows a slight decline from 5.96 in 2021 to 5.12 in 2023. This indicates that the company is selling its inventory at a slightly slower pace in recent years.
Receivables turnover reflects how well Altria collects outstanding customer payments. There is a significant fluctuation in the ratio over the years, with a remarkable increase from 2021 to 2023. The exceptionally high ratio of 344.83 in 2023 suggests that the company collected its receivables 344.83 times during the year, which is a positive indicator of effective credit management.
Payables turnover measures how quickly Altria pays its suppliers. The decreasing trend in payables turnover from 2019 to 2023, going from 21.80 to 10.68, indicates that the company is taking more time to pay its suppliers. This could be a strategy to manage cash flows or negotiate better payment terms.
Working capital turnover is not provided in the data, which makes it difficult to assess how efficiently the company is utilizing its working capital to generate sales revenue. It is essential to track this ratio to understand the overall efficiency of working capital management within the company.
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 | 43.48 | 68.03 | 62.35 | 52.93 | 112.87 |
| Days of sales outstanding (DSO) | days | 1.10 | 0.73 | 0.71 | 2.00 | 2.33 |
| Number of days of payables | days | 20.83 | 31.82 | 23.45 | 10.23 | 16.00 |
Activity ratios provide insights into how efficiently a company manages its assets and operations to generate revenues. Let's analyze Altria Group Inc.'s activity ratios based on the provided data:
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows a decrease from 118.13 days in 2019 to 71.32 days in 2023.
- A lower DOH indicates that Altria is managing its inventory more efficiently, turning over inventory quicker.
- This improvement suggests better inventory management practices or lower levels of obsolete inventory, potentially leading to cost savings and improved cash flow.
2. Days of Sales Outstanding (DSO):
- Altria experienced fluctuations in DSO, from 2.21 days in 2019 to 1.06 days in 2023.
- A lower DSO indicates that Altria collects its accounts receivable more quickly, improving cash flow and reducing the risk of bad debts.
- The decrease in DSO suggests effective credit and collection policies or improved customer payment terms.
3. Number of Days of Payables:
- Altria's days of payables shows an increasing trend from 16.74 days in 2019 to 34.16 days in 2023.
- A higher number of days of payables may indicate that Altria is taking longer to pay its trade creditors, potentially improving its cash conversion cycle.
- This extension in payment period could provide Altria with additional working capital, but it may also strain relationships with suppliers if it becomes too prolonged.
In conclusion, Altria Group Inc. has shown improvements in managing its inventory and collecting receivables efficiently over the years. The increase in days of payables may be a strategic approach to optimizing cash flow. It is essential for Altria to continue monitoring and optimizing its activity ratios to maintain operational efficiency and financial health.
See also:
Altria Group Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 14.22 | 14.95 | 15.58 | 12.40 | 11.92 |
| Total asset turnover | 0.61 | 0.65 | 0.61 | 0.53 | 0.48 |
Altria Group Inc.'s long-term activity ratios reflect the company's efficiency in generating sales relative to its fixed and total assets over the past five years.
The fixed asset turnover ratio demonstrates how effectively the company utilizes its fixed assets to generate revenue. Altria's fixed asset turnover has shown a decreasing trend from 2019 to 2023, indicating a decline in efficiency in generating sales from its fixed assets. However, the ratio still remains relatively high, suggesting that the company is able to generate significant revenue from its investments in fixed assets.
In contrast, the total asset turnover ratio measures how efficiently the company utilizes all its assets to generate revenue. Altria's total asset turnover has fluctuated over the past five years, experiencing both increases and decreases. The ratio has generally improved from 2019 to 2022 before declining slightly in 2023. This suggests that the company has been successful in generating revenue relative to its total assets, although there may have been some inefficiencies in 2023.
Overall, while Altria Group Inc. demonstrates strong revenue generation capabilities in relation to its assets, the fluctuating trends in these long-term activity ratios indicate the need for continual monitoring and potential optimization of asset utilization strategies to improve efficiency in the long term.