Stepan Company (SCL)
Receivables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 2,306,120 | 2,759,510 | 2,339,460 | 1,863,540 | 1,847,220 |
| Receivables | US$ in thousands | 422,050 | 436,914 | 419,542 | 301,318 | 276,841 |
| Receivables turnover | 5.46 | 6.32 | 5.58 | 6.18 | 6.67 |
December 31, 2023 calculation
Receivables turnover = Revenue ÷ Receivables
= $2,306,120K ÷ $422,050K
= 5.46
The receivables turnover ratio for Stepan Co. has shown some fluctuations over the past five years. The ratio decreased from 6.71 in 2019 to 5.51 in 2023, indicating that the company took longer to collect its accounts receivable in 2023 compared to prior years. A higher receivables turnover ratio is generally preferred as it signifies that the company is collecting payments from its customers more quickly.
The decreasing trend in the receivables turnover ratio may raise concerns about the company's credit policies, collection processes, or the creditworthiness of its customers. A lower turnover ratio could also indicate potential liquidity issues if the company is unable to convert its receivables into cash efficiently.
Further analysis would be beneficial to understand the root causes of the fluctuations in the receivables turnover ratio and to assess the effectiveness of Stepan Co.'s accounts receivable management practices.
Peer comparison
Dec 31, 2023