Owens Corning Inc (OC)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.02 | 5.54 | 5.99 | 7.64 | 5.37 |
| Receivables turnover | 9.73 | 10.01 | 8.91 | 7.54 | 9.30 |
| Payables turnover | 5.94 | 5.49 | 5.90 | 7.46 | 6.81 |
| Working capital turnover | 6.03 | 6.62 | 5.97 | 5.94 | 9.78 |
Owens Corning's activity ratios provide insight into the efficiency of the company's operations in managing its inventory, receivables, payables, and working capital.
The Inventory Turnover ratio indicates how many times the company sells and replaces its inventory during a given period. Owens Corning's Inventory Turnover has been relatively stable over the past five years, ranging between 5.36 and 6.37. This suggests that the company effectively manages its inventory levels to meet demand without excessive holding costs.
The Receivables Turnover ratio measures how efficiently the company collects cash from customers. Owens Corning's Receivables Turnover has generally been on an increasing trend, indicating that the company has been improving its credit policies or collection processes. A higher turnover rate implies faster conversion of accounts receivable into cash.
The Payables Turnover ratio reflects how efficiently Owens Corning pays its suppliers. The company's Payables Turnover ratio has decreased slightly over the years, from 6.81 in 2019 to 5.75 in 2023. A lower ratio may suggest that the company is taking longer to pay its suppliers, which could impact relationships or result in missed discount opportunities.
The Working Capital Turnover ratio shows how effectively Owens Corning utilizes its working capital to generate sales. The decreasing trend in this ratio indicates that the company's working capital is less productive in generating revenue over time. It is important for the company to assess its working capital management strategies to improve efficiency and maximize profitability.
Overall, while Owens Corning demonstrates solid management of inventory and receivables, there may be potential areas for improvement in payables management and working capital utilization to enhance operational efficiency and financial performance.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 60.59 | 65.90 | 60.92 | 47.81 | 67.92 |
| Days of sales outstanding (DSO) | days | 37.53 | 36.47 | 40.98 | 48.41 | 39.25 |
| Number of days of payables | days | 61.50 | 66.44 | 61.88 | 48.92 | 53.59 |
Owens Corning's activity ratios provide insights into its efficiency in managing inventory, collecting receivables, and paying suppliers.
1. Days of Inventory on Hand (DOH):
- Owens Corning's DOH has fluctuated over the past five years, ranging from 57.31 days in 2020 to 68.15 days in 2022.
- In 2023, the company improved its inventory management with DOH decreasing to 62.52 days, indicating that inventory turnover has increased.
- A lower DOH implies that Owens Corning is selling its inventory faster, which can lead to lower holding costs and improved cash flow.
2. Days of Sales Outstanding (DSO):
- The DSO measures how quickly Owens Corning collects payment from its customers.
- The trend in DSO has been relatively stable, with a slight increase in 2023 to 37.23 days from 35.94 days in 2022.
- A lower DSO is generally favorable as it indicates faster collection of receivables, improving liquidity and reducing the risk of bad debts.
3. Number of Days of Payables:
- Owens Corning's number of days of payables reflects how long it takes the company to settle its obligations to suppliers.
- The trend shows an increase in the number of days of payables over the years, from 53.59 days in 2019 to 63.46 days in 2023.
- A higher number of days of payables may suggest that Owens Corning is taking longer to pay its suppliers, potentially indicating a need to manage supplier relationships effectively.
Overall, analyzing these activity ratios together provides a comprehensive view of Owens Corning's operational efficiency and effectiveness in managing its working capital.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.50 | 2.58 | 2.16 | 1.82 | 1.86 |
| Total asset turnover | 0.85 | 0.89 | 0.84 | 0.73 | 0.72 |
The fixed asset turnover ratio measures how effectively a company utilizes its fixed assets to generate revenue. In the case of Owens Corning, the trend shows improvement over the last five years, from 1.86 in 2019 to 2.52 in 2023. This indicates that the company has become more efficient in generating sales from its fixed assets.
On the other hand, the total asset turnover ratio reflects the company's overall efficiency in using all its assets to generate sales. Owens Corning's total asset turnover ratio has also shown a positive trend, increasing from 0.72 in 2019 to 0.86 in 2023. This indicates that the company has improved its ability to generate sales relative to its total assets.
Overall, both the fixed asset turnover and total asset turnover ratios for Owens Corning demonstrate a positive trend, signaling improved efficiency in utilizing assets to generate revenue over the years.