Nucor Corp (NUE)

Short-term

Turnover ratios

The activity ratios of Nucor Corp. indicate the efficiency of the company in managing its inventory, receivables, payables, and working capital over the past five years.

1. Inventory Turnover:
- Nucor Corp.'s inventory turnover ratio has fluctuated over the years, ranging from 4.24 in 2021 to 5.32 in 2022. The ratio measures how efficiently the company is able to sell its inventory during a specific period.
- The decreasing trend in inventory turnover from 2022 to 2023 suggests that Nucor may be holding onto its inventory for a longer period, which could tie up funds and impact profitability. However, the ratio is still relatively stable, indicating effective inventory management overall.

2. Receivables Turnover:
- The receivables turnover ratio has generally increased over the years, indicating that Nucor has been collecting its receivables more quickly. The ratio improved from 8.76 in 2020 to 11.75 in 2023.
- A higher receivables turnover signifies that the company is efficient in collecting outstanding payments from customers, which improves cash flow and reduces the risk of bad debts.

3. Payables Turnover:
- The payables turnover ratio has fluctuated over the years, with a significant drop in 2023 compared to the previous year. The ratio decreased from 17.59 in 2022 to 13.31 in 2023.
- A lower payables turnover may indicate that Nucor is taking longer to pay its suppliers, which could potentially strain relationships with vendors or suppliers. However, it may also reflect negotiating better payment terms or managing cash flow more effectively.

4. Working Capital Turnover:
- Nucor's working capital turnover ratio has shown variability over the years, with a notable decrease in 2023 to 2.94 compared to 4.77 in 2021. The ratio measures how effectively the company is utilizing its working capital to generate sales.
- The declining trend in working capital turnover may raise concerns about the company's ability to efficiently utilize its working capital to support revenue generation. It is essential for Nucor to closely monitor and manage its working capital to optimize operational efficiency.

In conclusion, while Nucor Corp. has exhibited fluctuations in its activity ratios over the years, the company generally demonstrates efficiency in managing its inventory, receivables, payables, and working capital. Continuous monitoring and optimization of these ratios will be crucial for sustaining operational effectiveness and financial health.

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Average number of days

The activity ratios for Nucor Corp., as calculated using the days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables data, provide insights into the company's efficiency in managing its inventory, collecting receivables, and paying its suppliers.

1. Days of Inventory on Hand (DOH):
- Nucor Corp.'s DOH has shown variability over the past five years, ranging from a low of 68.62 days in 2022 to a high of 86.18 days in 2021. The current DOH of 75.69 days indicates the number of days it takes for the company to sell its inventory. A higher DOH suggests that the company may be carrying excess inventory or facing challenges in selling its products efficiently.

2. Days of Sales Outstanding (DSO):
- The DSO measures how long it takes for Nucor Corp. to collect payment from its customers. The DSO has fluctuated over the years, with a range from 31.05 days in 2023 to 41.66 days in 2020. The DSO of 31.05 days in 2023 indicates that the company is collecting payments from customers in a relatively efficient manner.

3. Number of Days of Payables:
- Nucor Corp.'s number of days of payables represents the average number of days it takes the company to pay its suppliers. The trend shows variability, with the highest number of days recorded in 2020 at 29.18 days. The current level of 27.41 days in 2023 suggests that the company is taking slightly longer to pay its suppliers compared to the previous years.

Overall, monitoring these activity ratios can provide valuable insights into Nucor Corp.'s operational efficiency and effectiveness in managing its working capital cycle. A careful analysis of these ratios in conjunction with other financial metrics can help assess the company's overall financial performance and management of its resources.

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Long-term

Nucor Corp.'s long-term activity ratios reflect the efficiency with which the company utilizes its assets to generate sales. The fixed asset turnover ratio has fluctuated over the past five years, ranging from 2.92 to 4.50, with the highest value observed in 2021. This indicates that Nucor has been able to generate significant revenue relative to its fixed assets invested in the business.

On the other hand, the total asset turnover ratio has also experienced variation, with values ranging from 0.98 to 1.41. Despite some fluctuations, the company has shown a consistent ability to generate sales in relation to its total assets. However, the total asset turnover ratio is lower compared to the fixed asset turnover ratio, suggesting that Nucor relies more heavily on its fixed assets to generate sales than its total assets.

Overall, both ratios suggest that Nucor effectively leverages its assets to drive revenue growth. The varying trends in these ratios over the years may indicate changes in the company's asset management strategies or shifts in its operational efficiency. Further analysis of Nucor's asset utilization and investment activities can provide deeper insights into the company's long-term performance and efficiency.