O-I Glass Inc (OI)

Short-term

Turnover ratios

Activity ratios provide insight into how efficiently a company is managing its resources and assets to generate sales revenue. Let's analyze the activity ratios for O-I Glass Inc:

1. Inventory Turnover: This ratio measures how many times a company's inventory is sold and replaced within a specific period. O-I Glass Inc's inventory turnover has been fluctuating over the years, with a moderate decrease from 2022 to 2023. The lower turnover rate in 2023 could indicate that the company is holding onto its inventory for a longer period, which may tie up working capital and potentially increase storage costs.

2. Receivables Turnover: This ratio reflects how efficiently a company is collecting payments from its customers. O-I Glass Inc has shown a generally increasing trend in receivables turnover, indicating an improvement in the collection of accounts receivable from 2019 to 2023. A higher turnover rate suggests that the company is promptly collecting payments from customers, which is a positive sign for its cash flow management.

3. Payables Turnover: The payables turnover ratio represents how quickly a company pays its suppliers. O-I Glass Inc's payables turnover has been relatively stable over the years, with a slight decrease in 2023. A lower turnover rate may indicate that the company is taking longer to pay its suppliers, potentially improving its working capital position but could strain supplier relationships if payment terms are extended too far.

4. Working Capital Turnover: This ratio indicates how efficiently a company is utilizing its working capital to generate sales revenue. O-I Glass Inc's working capital turnover has shown significant fluctuations, with a sharp decrease in 2022 followed by an increase in 2023. The high turnover rate in 2022 suggests that the company was able to generate a higher level of sales revenue relative to its working capital, while the improvement in 2023 indicates better utilization of working capital to support sales.

Overall, the analysis of O-I Glass Inc's activity ratios highlights both strengths and areas for potential improvement in managing inventory, receivables, payables, and working capital efficiently. Monitoring these ratios over time can provide valuable insights into the company's operational performance and financial health.

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Average number of days

O-I Glass Inc's activity ratios provide insight into the efficiency of the company's operations and management of its working capital.

1. Days of Inventory on Hand (DOH): The DOH measures how many days, on average, O-I Glass holds its inventory before it is sold. Over the five-year period, there has been some fluctuation in this ratio, ranging from a low of 50.02 days in 2022 to a high of 63.59 days in 2023. A lower DOH implies faster inventory turnover and efficient management of inventory levels.

2. Days of Sales Outstanding (DSO): The DSO ratio indicates how long it takes on average for O-I Glass to collect payments from its customers. The trend shows some variability, with the DSO ranging from 35.56 days in 2019 to a peak of 41.93 days in 2022. A lower DSO is preferable as it signifies quicker cash conversion from sales.

3. Number of Days of Payables: This ratio represents how long O-I Glass takes to pay its suppliers. The trend in the number of days of payables has increased slightly over the period, from 71.32 days in 2020 to 85.33 days in 2023. A longer payment period can indicate better cash flow management but may also strain supplier relationships if extended too far.

Together, these activity ratios highlight the importance of managing inventory levels, collecting receivables efficiently, and optimizing payment terms with suppliers to improve working capital performance and overall operational efficiency at O-I Glass Inc.

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Long-term

O-I Glass Inc's long-term activity ratios indicate the efficiency with which the company utilizes its assets to generate sales. The fixed asset turnover has shown a decreasing trend over the past five years, from 1.95 in 2019 to 1.90 in 2023. This suggests that O-I Glass is generating fewer sales for each dollar invested in fixed assets, which may indicate a decrease in the efficiency of utilizing these assets.

On the other hand, the total asset turnover ratio has been relatively stable, ranging from 0.66 in 2019 to 0.70 in 2023. This ratio reflects the company's ability to generate sales from all assets, including fixed and current assets. Although the total asset turnover ratio is lower compared to the fixed asset turnover ratio, it indicates a consistent performance in utilizing all assets to generate revenue.

Overall, the trend in the fixed asset turnover indicates a potential inefficiency in the utilization of fixed assets, while the stability of the total asset turnover suggests a consistent performance in generating sales from all assets. O-I Glass Inc may need to further analyze its fixed asset utilization to improve efficiency and profitability in the long term.