PPG Industries Inc (PPG)

Short-term

Turnover ratios

PPG Industries, Inc.'s activity ratios indicate its efficiency in managing various aspects of its operations.

1. Inventory Turnover: This ratio measures how many times a company's inventory is sold and replaced within a specific time period. PPG Industries has seen a consistent improvement in its inventory turnover ratio over the last five years, indicating that the company is managing its inventory more efficiently. In 2023, the inventory turnover ratio stood at 5.05, which suggests that the company's inventory is turning over approximately five times during the year.

2. Receivables Turnover: This ratio reflects how quickly a company collects cash from its credit sales. PPG Industries has maintained a relatively stable receivables turnover ratio over the years, with a slight increase in 2023 to 5.56. This indicates that the company is collecting its receivables at a slightly faster pace compared to previous years.

3. Payables Turnover: The payables turnover ratio measures how efficiently a company is managing its accounts payable by comparing credit purchases to average accounts payable. PPG Industries' payables turnover ratio has fluctuated over the years but has generally remained within a stable range. A decrease in this ratio can indicate that the company is taking longer to pay its suppliers.

4. Working Capital Turnover: This ratio evaluates the efficiency of a company in generating sales revenue relative to its working capital. PPG Industries has shown fluctuations in its working capital turnover over the years, with a peak in 2021 and a slight decrease in 2023 to 7.68. A higher working capital turnover ratio indicates that the company is generating more sales revenue per unit of working capital.

Overall, PPG Industries, Inc. demonstrates effective management of its inventory, receivables, payables, and working capital turnover ratios, which are crucial indicators of operational efficiency and financial health.

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Average number of days

The activity ratios for PPG Industries, Inc. indicate the efficiency of the company in managing its inventory, receivables, and payables during the past five years.

1. Days of Inventory on Hand (DOH):
- The days of inventory on hand have shown a fluctuating trend over the last five years, ranging from 72.13 days in 2019 to 81.43 days in 2020 before decreasing to 72.25 days in 2023.
- The current DOH of 72.25 days in 2023 suggests that PPG Industries is managing its inventory more efficiently compared to the previous year.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding have also varied over the years, from 66.42 days in 2019 to 71.92 days in 2020, with a decrease to 65.59 days in 2023.
- The decreasing trend in DSO indicates that PPG Industries is collecting its receivables more quickly, which is a positive sign of effective accounts receivable management.

3. Number of Days of Payables:
- The number of days of payables has shown fluctuations annually, with a decrease from 88.50 days in 2019 to 83.49 days in 2022, followed by an increase to 88.73 days in 2023.
- The increase in the number of days of payables in 2023 suggests that PPG Industries is taking longer to pay its suppliers, indicating a potential strain on supplier relationships or cash flow management.

Overall, while the company has been able to improve its inventory management and accounts receivable collection efficiency, the increase in the number of days of payables in 2023 may warrant further investigation to ensure sustainable working capital management practices.

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Long-term

The fixed asset turnover ratio for PPG Industries, Inc. has been relatively stable over the past five years, ranging from 4.42 to 5.30 times. This indicates that the company generates between 4.42 to 5.30 dollars in sales for each dollar invested in fixed assets. A higher ratio suggests better efficiency in utilizing fixed assets to generate revenue.

On the other hand, the total asset turnover ratio has also remained relatively steady, with values ranging from 0.71 to 0.86. This ratio signifies the company's ability to generate sales revenue relative to its total assets. A higher total asset turnover ratio indicates that the company is generating more sales for each dollar invested in all assets.

Comparing the two turnover ratios, we can observe that PPG Industries, Inc. is more efficient in generating revenue with its fixed assets compared to its total assets. The stability of these ratios over the years suggests that the company has maintained a consistent level of asset utilization efficiency, which is a positive indicator of operational performance.