Materion Corporation (MTRN)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently Materion Corp is managing its operations.

1. Inventory Turnover: The inventory turnover ratio has declined over the years, indicating that Materion Corp is taking longer to sell its inventory. This could suggest potential issues with inventory management or changing demand patterns.

2. Receivables Turnover: The receivables turnover ratio has shown some fluctuation but remains relatively stable. A higher turnover ratio indicates that Materion Corp is collecting its accounts receivable more quickly, which is a positive sign of efficient credit management.

3. Payables Turnover: The payables turnover ratio has decreased consistently over the years, indicating that Materion Corp is taking longer to pay its suppliers. This could signify a deteriorating relationship with suppliers or potential cash flow issues.

4. Working Capital Turnover: The working capital turnover ratio has shown slight fluctuations but remains relatively steady. A higher turnover ratio suggests that Materion Corp is effectively utilizing its working capital to generate revenue.

Overall, Materion Corp may need to focus on improving its inventory turnover and payables turnover ratios to enhance operational efficiency and cash flow management. It should continue to monitor and optimize its activity ratios to ensure sustainable growth and profitability.

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Average number of days

Materion Corp's activity ratios provide insight into how effectively the company manages its inventory, collects its receivables, and pays its payables.

1. Days of Inventory on Hand (DOH) has been gradually increasing over the past five years, from 75.02 days in 2019 to 122.47 days in 2023. This indicates that Materion Corp is holding onto its inventory for a longer period before selling it. The increase could be due to factors like slower sales, overstocking, or inefficiencies in managing inventory levels.

2. Days of Sales Outstanding (DSO) fluctuated over the period, peaking in 2021 at 54.01 days and improving to 42.25 days in 2023. A lower DSO suggests that Materion Corp is collecting its receivables more efficiently, converting sales into cash faster. The recent improvement in DSO reflects better credit control and timely collection efforts by the company.

3. Number of Days of Payables has shown an increasing trend, from 17.03 days in 2019 to 34.85 days in 2023. This indicates that Materion Corp is taking more time to pay its suppliers. While a longer payment period can improve cash flow in the short term, it may strain supplier relationships in the long run if not managed effectively.

Overall, Materion Corp's activity ratios suggest room for improvement in managing inventory levels more efficiently and optimizing the balance between collecting receivables promptly and paying payables timely to maintain healthy working capital management.

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Long-term

Materion Corp's long-term activity ratios indicate the efficiency with which the company generates sales in relation to its fixed assets and total assets.

The fixed asset turnover ratio shows a declining trend over the past five years, decreasing from 5.10 in 2019 to 3.24 in 2023. This indicates that the company is generating fewer sales relative to its investment in fixed assets. A lower fixed asset turnover ratio may suggest underutilization of fixed assets or inefficiencies in production processes and equipment usage.

On the other hand, the total asset turnover ratio also exhibits a decreasing trend, declining from 1.39 in 2019 to 0.94 in 2023. This ratio indicates the company's ability to generate sales using all of its assets, including both fixed and current assets. A decreasing total asset turnover ratio could imply that Materion Corp is becoming less efficient in generating sales compared to its total asset base.

Overall, the declining trends in both the fixed asset turnover and total asset turnover ratios may raise concerns about Materion Corp's asset utilization and efficiency in generating sales over the long term. Further analysis of the company's operational processes and capital investment decisions may be necessary to address the underlying reasons for the decreasing activity ratios.