MP Materials Corp (MP)

Short-term

Turnover ratios

The Inventory turnover ratio for MP Materials Corp has decreased over the years, indicating that the company is selling its inventory at a slower pace. This could suggest potential issues with inventory management and sales efficiency, which may lead to excess inventory levels.

The Receivables turnover ratio is not available for analysis, which could imply that the company does not publish or track this metric or that they have very low levels of accounts receivable turnover.

Similarly, the Payables turnover ratio data is not provided, which prevents us from evaluating the company's efficiency in managing its accounts payable and supplier relationships.

Looking at the Working Capital turnover ratio, MP Materials Corp's performance has varied over the years. The ratio shows a mixed trend, with fluctuations in working capital efficiency. A declining trend in this ratio may indicate difficulties in generating sales revenue relative to the working capital invested in the business.

In conclusion, while the Inventory turnover ratio provides some insights into MP Materials Corp's operational efficiency, the unavailability of data for Receivables turnover and Payables turnover ratios limits a comprehensive analysis of the company's overall working capital management and liquidity.

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Average number of days

Based on the data provided, MP Materials Corp's activity ratios can be analyzed as follows:

1. Days of Inventory on Hand (DOH):
- The DOH represents the average number of days it takes for a company to sell its entire inventory.
- For MP Materials Corp, the trend in DOH shows an increase from 115.03 days in 2020 to 234.07 days in 2023, indicating that the company is taking longer to sell its inventory.
- A high DOH value may suggest excess inventory levels or potential issues with sales and demand forecasting.

2. Days of Sales Outstanding (DSO):
- The DSO ratio measures the average number of days it takes for a company to collect its accounts receivable.
- The data provided shows that DSO values are not available, which could be due to the company not providing sufficient information or not having accounts receivable.

3. Number of Days of Payables:
- The number of days of payables represents the average number of days it takes for a company to pay its suppliers.
- The data indicates that information on the days of payables is unavailable for MP Materials Corp, which could limit the assessment of the company's payment practices and liquidity management.

In conclusion, based on the available data, MP Materials Corp's activity ratios suggest a significant increase in the days of inventory on hand, while information on days of sales outstanding and days of payables is not provided. This could indicate that the company may need to focus on managing its inventory levels efficiently to improve its overall working capital management.

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Long-term

The fixed asset turnover ratio measures the efficiency with which a company generates sales revenue from its investment in fixed assets. In the case of MP Materials Corp, the fixed asset turnover ratio has shown an improving trend over the years, increasing from 0.27 in 2020 to 0.56 in 2022. This indicates that the company has been able to generate more sales revenue for each dollar invested in fixed assets.

On the other hand, the total asset turnover ratio evaluates how efficiently a company utilizes its total assets to generate sales. MP Materials Corp's total asset turnover ratio has varied during the period under review, with a peak of 0.24 in 2022 and dropping to 0.09 in 2024. A declining total asset turnover ratio suggests that the company may be experiencing challenges in effectively utilizing its total assets to generate sales.

Overall, the trend in the fixed asset turnover ratio for MP Materials Corp indicates an improved efficiency in utilizing fixed assets to generate sales revenue, while the fluctuating total asset turnover ratio suggests a need for further optimization in leveraging the company's total asset base for revenue generation.