Olin Corporation (OLN)

Short-term

Turnover ratios

The activity ratios of Olin Corp. provide insights into the efficiency of the company's operations in managing its assets and liabilities.

1. Inventory turnover: Olin Corp. has shown a declining trend in inventory turnover over the last two quarters, from 7.64 in Q4 2022 to 6.60 in Q4 2023. This may indicate that the company is taking longer to sell its inventory, which could lead to potential liquidity issues if inventory levels remain high.

2. Receivables turnover: The receivables turnover has been relatively stable, with some fluctuations but generally maintaining a range between 7.53 and 9.69. This suggests that Olin Corp. is efficient in collecting payments from its customers, which is positive for cash flow management.

3. Payables turnover: The payables turnover ratio has shown some volatility, ranging from 7.36 to 8.84 over the past eight quarters. A higher payables turnover ratio indicates that the company is paying its suppliers more quickly, which can be both positive (maintaining good relationships with suppliers) and negative (potentially straining cash flow).

4. Working capital turnover: Olin Corp. has seen fluctuations in the working capital turnover ratio, with peaks and troughs but generally staying above 10. This ratio indicates the company's ability to generate sales relative to its working capital, showing efficiency in utilizing its current assets to support its operations.

Overall, Olin Corp. should continue to monitor its activity ratios to ensure optimal management of its resources, maintaining a balance between efficient inventory management, timely receivables collection, and strategic payables handling.

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Average number of days

To analyze the activity ratios of Olin Corp., we will focus on Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

1. Days of Inventory on Hand (DOH): This ratio indicates how long, on average, inventory is held before being sold. A lower DOH is generally more favorable as it signifies efficient inventory management. In Q4 2023, DOH increased to 55.31 days compared to the previous quarter but is still higher than Q4 2022. This suggests that Olin Corp. might be facing challenges in managing its inventory efficiently.

2. Days of Sales Outstanding (DSO): DSO measures the average number of days it takes for a company to collect payment after a sale is made. A lower DSO is preferable as it indicates faster cash conversion. Olin Corp.'s DSO has fluctuated over the quarters but has generally shown an increasing trend. In Q4 2023, DSO increased to 47.54 days, which indicates a longer collection period compared to the previous quarter.

3. Number of Days of Payables: This ratio represents the average number of days it takes a company to pay its suppliers. A higher number of days of payables is generally positive as it suggests the company is taking longer to pay its bills, potentially improving cash flow. Olin Corp.'s number of days of payables has also varied each quarter, with Q4 2023 seeing an increase to 49.94 days, indicating a longer payment period compared to the previous quarter.

Overall, the analysis of Olin Corp.'s activity ratios reveals that the company may be facing challenges in managing its inventory efficiently and collecting payments in a timely manner. However, the longer payment period to suppliers may be helping the company's cash flow. It is essential for Olin Corp. to monitor and improve these activity ratios to enhance operational efficiency and financial performance.

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Long-term

The fixed asset turnover ratio measures how efficiently a company generates sales from its investment in fixed assets. For Olin Corp., the ratio has been consistently declining from Q1 2022 to Q4 2023, indicating a reduction in the company's ability to generate revenue from its fixed assets over the period. This could be a concern as it may signal underutilization or inefficiency in managing fixed assets.

On the other hand, the total asset turnover ratio reflects how effectively a company utilizes all of its assets to generate sales. Olin Corp.'s total asset turnover ratio has also shown a decreasing trend from Q1 2022 to Q4 2023. This suggests that the company's overall asset utilization in revenue generation has weakened over time.

In summary, both the fixed asset turnover and total asset turnover ratios for Olin Corp. have declined over the examined period. This may indicate potential inefficiencies or underutilization of assets, which could impact the company's overall profitability and operational performance. Further analysis and investigation into the company's asset management practices are warranted to address these downward trends and improve long-term operational efficiency.