Olin Corporation (OLN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 7.19 | 8.07 | 8.11 | 9.66 | 8.60 |
| Receivables turnover | 439.33 | 214.39 | 28,044.00 | 361.94 | 7.73 |
| Payables turnover | 7.96 | 9.08 | 8.31 | 8.94 | 9.17 |
| Working capital turnover | 15.11 | 15.57 | 14.86 | 10.55 | 9.30 |
The activity ratios of Olin Corp. provide insights into the efficiency of the company's management of its inventory, receivables, payables, and working capital turnover over the past five years.
Inventory turnover measures how effectively the company manages its inventory levels. A higher turnover indicates that Olin Corp. is selling its inventory more frequently compared to holding onto it. The trend shows a slight decrease from 2019 to 2023, which could be a sign of either changing sales patterns or inventory management strategies.
Receivables turnover reflects how quickly the company collects payments from its customers. A higher turnover ratio suggests that Olin Corp. is efficient in collecting payments. The decreasing trend from 2019 to 2023 may indicate a slower collection process or changes in the company's credit policies.
Payables turnover measures how efficiently the company manages its payment obligations to suppliers. A higher turnover ratio indicates that Olin Corp. is paying its suppliers more quickly. The fluctuating trend in payables turnover from 2019 to 2023 may be influenced by factors such as payment terms negotiations or changes in procurement practices.
Working capital turnover evaluates how efficiently the company utilizes its working capital to generate sales. A higher turnover ratio suggests that Olin Corp. is effectively using its resources to drive revenue. The increasing trend from 2019 to 2023 indicates improved efficiency in generating sales with the available working capital.
Overall, the analysis of Olin Corp.'s activity ratios suggests that the company has shown varying levels of efficiency in managing its inventory, receivables, payables, and working capital turnover over the past five years. Monitoring these ratios can help identify areas where the company can improve its operational performance and enhance its financial health.
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 | 50.77 | 45.21 | 44.98 | 37.79 | 42.46 |
| Days of sales outstanding (DSO) | days | 0.83 | 1.70 | 0.01 | 1.01 | 47.22 |
| Number of days of payables | days | 45.84 | 40.21 | 43.91 | 40.84 | 39.79 |
Activity ratios provide insight into how efficiently a company manages its assets and operations. In the case of Olin Corp., the Days of Inventory on Hand (DOH) has shown an increasing trend over the past five years, indicating that the company is holding inventory for a longer period. This could suggest potential issues with managing inventory levels or sales forecasting.
The Days of Sales Outstanding (DSO) has fluctuated over the years, with a significant increase in 2023 compared to 2022. This increase may indicate that the company is taking longer to collect payments from its customers, which could impact cash flow and liquidity.
On the other hand, the Number of Days of Payables has also shown variability, with an upward trend from 2020 to 2023. A longer period of payables indicates that the company is taking more time to pay its suppliers, which could be a strategy to manage cash flow or negotiate better terms.
Overall, while the activity ratios of Olin Corp. exhibit some fluctuations over the years, there are potential areas for improvement in managing inventory levels, accounts receivable collection, and payables. Monitoring and optimizing these ratios can help enhance operational efficiency and financial performance in the future.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.67 | 3.46 | 2.89 | 1.72 | 1.77 |
| Total asset turnover | 0.87 | 1.15 | 0.99 | 0.66 | 0.64 |
The long-term activity ratios of Olin Corp provide insights into the company's efficiency in generating sales relative to its investment in assets over the past five years.
1. Fixed asset turnover: The fixed asset turnover ratio indicates how efficiently Olin Corp is utilizing its fixed assets to generate sales. A higher ratio is generally favorable as it suggests that the company is generating more revenue from its investments in fixed assets. Olin Corp's fixed asset turnover has fluctuated over the years, with a peak of 3.51 in 2022 and a low of 1.82 in 2020. This indicates that in 2022, Olin Corp was able to generate $3.51 in sales for every dollar invested in fixed assets, showcasing improved efficiency. However, the fluctuation in the ratio over the years may suggest varying levels of efficiency in utilizing fixed assets.
2. Total asset turnover: The total asset turnover ratio measures how efficiently Olin Corp is utilizing all its assets, both fixed and current, to generate sales. A higher total asset turnover ratio indicates that the company is more effective in generating sales from its total asset base. Olin Corp's total asset turnover has also varied over the years, with a peak of 1.17 in 2022 and a low of 0.67 in 2019. The increase in the total asset turnover ratio from 2019 to 2022 suggests that Olin Corp improved in generating sales from its total asset base, reflecting enhanced efficiency in asset utilization.
In conclusion, Olin Corp's long-term activity ratios highlight fluctuations in efficiency in utilizing fixed and total assets to generate sales over the past five years. While the company showed improvements in certain years, the varying ratios indicate the need for continuous monitoring and optimization of asset utilization strategies to enhance overall efficiency and profitability.