Reliance Steel & Aluminum Co (RS)

Short-term

Turnover ratios

Based on the activity ratios of Reliance Steel & Aluminum Co. provided, we can derive several insights:

1. Inventory Turnover:
- Reliance Steel & Aluminum Co. has maintained a relatively stable inventory turnover ratio over the quarters, ranging between 4.94 and 5.90.
- The company effectively manages its inventory, with an average of around 5 times turnover per year. This indicates efficient inventory management and the ability to quickly sell and replenish its stock.

2. Receivables Turnover:
- The receivables turnover ratio has shown consistency over the quarters, fluctuating between 7.57 and 10.63.
- Reliance Steel & Aluminum Co. efficiently collects its receivables, with an average turnover of approximately 9 times per year. This suggests strong credit policies and effective collection procedures.

3. Payables Turnover:
- The payables turnover ratio has exhibited stability but at a higher level compared to the previous year, with values ranging from 17.00 to 28.55.
- The company is effectively managing its payables, with an average turnover of about 23 times per year. This implies that Reliance Steel & Aluminum Co. has efficient cash flow management and may benefit from favorable credit terms.

4. Working Capital Turnover:
- The working capital turnover ratio has shown a decreasing trend over the quarters, declining from 5.22 to 3.77.
- Reliance Steel & Aluminum Co. is utilizing its working capital less efficiently in generating sales, with an average turnover of approximately 4 times per year. This may indicate a decrease in sales relative to its working capital level.

In summary, Reliance Steel & Aluminum Co. demonstrates solid efficiency in managing its inventory, receivables, and payables, as reflected in its turnover ratios. However, the decreasing trend in the working capital turnover ratio warrants further investigation into the company's operational efficiency and sales performance relative to its working capital utilization.

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Average number of days

Reliance Steel & Aluminum Co.'s activity ratios indicate how efficiently the company is managing its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH): The trend in DOH shows an increase from Q1 2023 to Q4 2023, which means the company is holding onto inventory for a longer period. This may indicate a slowdown in sales or potential issues in inventory management.

2. Days of Sales Outstanding (DSO): The DSO has fluctuated over the quarters but generally decreased towards Q4 2023. This suggests that the company is collecting receivables more quickly, which is a positive sign as it indicates efficient credit management and timely collections.

3. Number of Days of Payables: The number of days of payables has been relatively stable, indicating that the company is maintaining consistent payment terms with its suppliers. However, a slight increase in Q4 2023 compared to the previous quarters could suggest a potential strain on the company's liquidity or negotiating power with suppliers.

Overall, a thorough analysis of these activity ratios in conjunction with other financial metrics would provide a comprehensive view of Reliance Steel & Aluminum Co.'s operational efficiency and effectiveness in managing its working capital.

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Long-term

Reliance Steel & Aluminum Co.'s long-term activity ratios, namely the fixed asset turnover and total asset turnover, provide insights into the company's efficiency in managing its assets to generate sales.

The fixed asset turnover ratio measures how effectively the company generates revenue from its fixed assets. In this case, the fixed asset turnover ratio has been consistently high over the past eight quarters, ranging from 6.59 to 9.02. This indicates that Reliance Steel & Aluminum Co. is efficiently utilizing its fixed assets to generate sales. A higher fixed asset turnover ratio suggests that the company is effectively using its long-term assets to drive revenue growth.

The total asset turnover ratio, on the other hand, reflects the company's ability to generate sales from all of its assets. The total asset turnover ratio for Reliance Steel & Aluminum Co. has also been relatively stable, ranging from 1.41 to 1.71. A higher total asset turnover ratio indicates that the company is efficient in generating sales from its total assets, including both fixed and current assets.

Overall, the consistently high fixed asset turnover and relatively stable total asset turnover ratios suggest that Reliance Steel & Aluminum Co. is effectively managing its assets to drive revenue growth. The company's strong performance in utilizing both fixed and total assets to generate sales is a positive indicator of its operational efficiency and effectiveness in utilizing its resources.