MP Materials Corp (MP)

Short-term

Turnover ratios

Inventory turnover for MP Materials Corporation has shown a declining trend over the past eight quarters, indicating that the company is taking longer to sell its inventory. This could be a sign of inefficient inventory management or potential issues with sales and demand.

The receivables turnover ratio has been fluctuating but generally increasing over the quarters, suggesting that the company is collecting its accounts receivable more quickly. A higher receivables turnover ratio is favorable as it indicates efficient credit management and timely collection of receivables.

The payables turnover ratio is only available for Q4 2022 and Q4 2023, with a notable increase from 1.28 to 3.31. This indicates that the company is taking longer to pay its creditors in Q4 2023 compared to the previous quarter. However, without data for the other quarters, it is difficult to assess the overall trend in payables turnover.

The working capital turnover ratio has been gradually decreasing over the quarters, suggesting that the company's efficiency in generating revenue from its working capital has declined. A lower working capital turnover ratio may indicate inefficiencies in the utilization of working capital to support sales and operations.

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Average number of days

Days of inventory on hand (DOH) for MP Materials Corporation have been fluctuating over the last eight quarters, ranging from a high of 374.72 days in Q4 2023 to a low of 177.46 days in Q1 2022. The upward trend in recent quarters indicates a potential increase in excess inventory levels, which could lead to higher storage costs and potentially lower liquidity.

Days of sales outstanding (DSO) have also shown variability, with the number of days it takes to collect receivables shifting from a minimum of 13.60 days in Q3 2022 to a maximum of 30.91 days in Q1 2022. A lower DSO suggests efficient management of accounts receivable, while a higher DSO may indicate issues with customer creditworthiness or collection procedures.

The number of days of payables is only available for Q4 2023 and Q4 2022, with figures of 110.21 days and 286.03 days, respectively. A decreasing trend in days of payables can suggest a more aggressive approach to managing payables, which may strain relationships with suppliers but improve cash flow in the short term.

In summary, MP Materials Corporation's activity ratios reflect fluctuations in inventory management, receivables collection efficiency, and payables management over the past eight quarters, highlighting potential areas for further investigation and improvement in working capital management.

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Long-term

The fixed asset turnover ratio for MP Materials Corporation has been gradually decreasing over the past eight quarters, indicating that the company is generating less revenue in relation to its investment in fixed assets. This trend suggests that the utilization of the company's fixed assets has been declining, which could be a cause for concern as it may signify inefficiencies in the company's operations or a decrease in demand for its products.

On the other hand, the total asset turnover ratio has also shown a decreasing trend over the same period, albeit less pronounced compared to the fixed asset turnover ratio. This implies that MP Materials is generating less revenue in relation to its total assets, which includes both fixed and current assets. A declining total asset turnover ratio could indicate that the company's overall efficiency in generating sales from its total asset base is deteriorating.

Overall, the declining trends in both the fixed asset turnover and total asset turnover ratios for MP Materials Corporation suggest that the company may be facing challenges in efficiently utilizing its assets to generate revenue. This could potentially impact the company's profitability and long-term financial performance if not addressed effectively. Further analysis and investigation into the factors contributing to these trends would be beneficial in identifying and addressing any underlying issues affecting the company's asset management and revenue generation capabilities.