Sealed Air Corporation (SEE)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company manages its assets and liabilities. Let's analyze the activity ratios of Sealed Air Corp.:

1. Inventory Turnover:
Sealed Air Corp.'s inventory turnover has been relatively stable over the past five years, ranging from 4.47 to 5.66 times. This ratio indicates how many times the company's inventory is sold and replaced within a given period. A higher turnover implies efficient management of inventory levels. Sealed Air's current ratio of 4.97 suggests that the company is effectively managing its inventory levels, but there might be room for improvement compared to previous years.

2. Receivables Turnover:
The receivables turnover ratio measures how efficiently the company is collecting payments from customers. Sealed Air Corp.'s receivables turnover has shown an increasing trend over the past five years, from 7.16 to 9.44 times. A higher turnover indicates quicker collection of receivables, which can improve cash flow and reduce the risk of bad debts. Sealed Air's current ratio of 9.44 suggests an improvement in collecting payments from customers compared to previous years.

3. Payables Turnover:
The payables turnover ratio reflects how quickly the company pays its suppliers. Sealed Air Corp.'s payables turnover has fluctuated between 4.01 and 5.03 times over the past five years. A higher turnover ratio indicates that the company is paying its suppliers more quickly. Sealed Air's current ratio of 5.03 suggests that the company is managing its payables efficiently compared to previous years.

4. Working Capital Turnover:
The working capital turnover ratio indicates how effectively the company utilizes its working capital to generate sales. Sealed Air Corp.'s working capital turnover has varied significantly over the past five years, from 9.54 to 161.20 times. A higher turnover implies that the company is generating more sales from each dollar of working capital invested. The significant fluctuations in this ratio suggest changes in the company's operational efficiency and capital management strategies.

In conclusion, Sealed Air Corp. has shown mixed performance in its activity ratios over the years. While the company has demonstrated improvements in receivables turnover and payables turnover, there may be opportunities to enhance inventory turnover and stabilize working capital turnover for better efficiency in managing assets and liabilities.

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Average number of days

Activity ratios provide insight into how effectively a company manages its assets and liabilities to generate sales.

1. Days of Inventory on Hand (DOH): Sealed Air Corp.'s inventory turnover has shown fluctuations over the past five years, ranging from 64.52 to 81.73 days. The decreasing trend from 2019 to 2021 indicates an improvement in inventory management efficiency, but the recent increase in DOH in 2022 and 2023 raises concerns about potential inventory inefficiencies or overstocking.

2. Days of Sales Outstanding (DSO): The reduction in DSO from 51.01 days in 2019 to 38.68 days in 2023 indicates an improvement in the company's accounts receivable collection efficiency. The lower DSO suggests that Sealed Air Corp. is collecting payments from customers more promptly, which is a positive sign for cash flow management.

3. Number of Days of Payables: The decreasing trend in the number of days of payables from 83.55 days in 2019 to 72.53 days in 2023 indicates that Sealed Air Corp. is taking longer to pay its suppliers. This can be seen as a positive for cash flow management, as the company is utilizing its trade credit more effectively.

Overall, a decreasing trend in DSO and an increasing trend in DOH may signal an improvement in working capital management, but the company should closely monitor its inventory levels to ensure optimization. Additionally, the extension of days of payables suggests that Sealed Air Corp. is effectively managing its payment terms with suppliers.

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Long-term

The fixed asset turnover ratio for Sealed Air Corp. has been decreasing over the past five years, from 4.20 in 2019 to 3.88 in 2023. This indicates that the company is generating less revenue from its fixed assets each year. Despite this decline, the ratio remains relatively high, suggesting that Sealed Air is efficiently utilizing its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio has also decreased over the same period, from 0.83 in 2019 to 0.76 in 2023. This indicates that the company is generating less revenue for every dollar of total assets it holds. The decline in this ratio may suggest that Sealed Air's overall efficiency in generating revenue has decreased over the years.

Overall, both the fixed asset turnover and total asset turnover ratios suggest that Sealed Air Corp. may need to evaluate and enhance its asset utilization efficiency to improve its long-term profitability and financial performance.