NewMarket Corporation (NEU)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.76 | 4.22 | 3.36 | 3.63 | 3.53 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 4.25 | 4.00 | 3.60 | 3.55 | 3.43 |
NewMarket Corporation's analysis of activity ratios reveals the following insights:
1. Inventory Turnover:
- The inventory turnover ratio improved over the five-year period, from 3.53 in 2020 to 3.76 in 2024.
- Generally, a higher inventory turnover indicates efficient management of inventory and swift conversion of inventory into sales.
- The fluctuation in the ratio suggests some variability in the company's sales and inventory management efficiency over the years.
2. Receivables Turnover:
- The receivables turnover data is not available, indicating that specific information on how quickly the company collects its accounts receivable is not provided.
- This ratio is crucial in assessing the effectiveness of credit and collection policies but cannot be analyzed with the given data.
3. Payables Turnover:
- Similar to receivables turnover, the payables turnover information is missing in the dataset.
- Payables turnover ratio helps in understanding how long it takes the company to pay its suppliers, hence impacting cash flow management.
4. Working Capital Turnover:
- The working capital turnover ratio increased steadily from 3.43 in 2020 to 4.25 in 2024.
- A rising working capital turnover indicates that the company is efficiently utilizing its working capital to generate sales.
- This trend suggests that NewMarket Corporation effectively manages its working capital to support its operational activities.
In conclusion, while the inventory turnover and working capital turnover ratios show positive trends, the lack of data for receivables turnover and payables turnover limits the comprehensive assessment of NewMarket Corporation's overall activity efficiency and liquidity management.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 97.08 | 86.47 | 108.49 | 100.62 | 103.38 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
NewMarket Corporation's Days of Inventory on Hand (DOH) ratio has shown some fluctuations over the years. On December 31, 2020, the company held inventory for an average of 103.38 days, which decreased to 100.62 days by December 31, 2021. However, by the end of December 31, 2022, the DOH ratio increased to 108.49 days before dropping significantly to 86.47 days by December 31, 2023. Subsequently, it rose again to 97.08 days by December 31, 2024.
The Days of Sales Outstanding (DSO) and the Number of Days of Payables data for NewMarket Corporation were unavailable for the specified years, indicating a lack of information on the company's credit collection and payment terms during those periods.
Overall, while the inventory management of NewMarket Corporation has shown some variability, the absence of DSO and payables data limits a comprehensive assessment of the company's activity ratios during the specified years.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 4.19 | 3.16 | 3.02 |
| Total asset turnover | 0.89 | 1.17 | 1.15 | 0.92 | 1.04 |
The Fixed Asset Turnover ratio measures how effectively a company generates sales revenue from its investments in fixed assets. In the case of NewMarket Corporation, the ratio has shown an increasing trend over the years, from 3.02 in 2020 to 4.19 in 2022. This indicates that the company has been able to generate more sales relative to its investment in fixed assets, reflecting efficiency in asset utilization.
On the other hand, the Total Asset Turnover ratio assesses the company's ability to generate sales from its total assets. NewMarket Corporation's Total Asset Turnover ratio fluctuated during the period, with a decrease from 1.04 in 2020 to 0.92 in 2021, followed by an increase to 1.15 in 2022 and 1.17 in 2023, and a decline to 0.89 in 2024. This indicates varying levels of efficiency in utilizing all assets to generate revenue over the years.
Overall, while the Fixed Asset Turnover ratio shows an improving trend and signifies effective utilization of fixed assets to generate sales, the fluctuating Total Asset Turnover ratio indicates varying levels of efficiency in utilizing all assets for revenue generation. Further analysis and comparison with industry averages may provide more insights into NewMarket Corporation's long-term activity efficiency.