Sonoco Products Company (SON)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.10 | 6.90 | 5.27 | 8.06 | 9.30 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | — | 7.66 | 11.63 | 42.06 | 16.42 |
Based on the provided data for Sonoco Products Company, here is a comprehensive analysis of the activity ratios:
1. Inventory Turnover:
- The inventory turnover ratio for Sonoco Products Company has shown a fluctuating trend over the years. It decreased from 9.30 in 2020 to 8.06 in 2021, then further to 5.27 in 2022, increased to 6.90 in 2023, and decreased significantly to 4.10 in 2024.
- A high inventory turnover ratio indicates that the company is efficiently managing its inventory levels, converting them into sales quickly. A declining trend might suggest issues such as overstocking or slowing sales.
2. Receivables Turnover:
- The data provided does not include information on the receivables turnover ratio for Sonoco Products Company for all the years specified. This ratio is essential in assessing how efficiently the company is collecting its receivables from customers.
3. Payables Turnover:
- Similar to receivables turnover, the information for payables turnover is not available in the provided data. The payables turnover ratio would have helped in understanding how quickly the company pays its suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio for Sonoco Products Company exhibited a varied pattern from 2020 to 2024. It was 16.42 in 2020, surged to 42.06 in 2021, then dropped sharply to 11.63 in 2022, further decreased to 7.66 in 2023, and was not provided for 2024.
- A higher working capital turnover ratio implies efficient utilization of working capital to generate sales. The fluctuations in this ratio could indicate changes in the company's working capital management efficiency over the years.
In conclusion, the analysis of Sonoco Products Company's activity ratios reveals fluctuating trends in inventory turnover and working capital turnover, while data for receivables turnover and payables turnover is not available. Further insights into the company's management of receivables and payables would provide a more comprehensive view of its operational efficiency and financial health.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 89.03 | 52.87 | 69.23 | 45.31 | 39.25 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Sonoco Products Company's Days of Inventory on Hand (DOH) have shown fluctuations over the years, ranging from 39.25 days as of December 31, 2020, to a peak of 89.03 days on December 31, 2024. The increasing trend observed until 2024 may indicate inefficiencies in managing the company's inventory levels.
The Days of Sales Outstanding (DSO) and Number of Days of Payables data are not available, indicating a lack of information to analyze the efficiency of the company's accounts receivable and accounts payable management.
In conclusion, the increasing trend in Days of Inventory on Hand raises concerns about inventory management efficiency, while the lack of data on DSO and Number of Days of Payables limits a comprehensive analysis of Sonoco Products Company's activity ratios.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 3.61 | 4.31 | 4.21 |
| Total asset turnover | 0.42 | 0.94 | 1.02 | 1.10 | 0.99 |
Long-term activity ratios provide insights into how effectively a company manages its assets to generate sales. Let's analyze the long-term activity ratios of Sonoco Products Company over the years:
1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate revenue. Sonoco's fixed asset turnover has shown variability over the years:
- In 2020, the ratio was 4.21, indicating that Sonoco generated $4.21 in revenue for every dollar invested in fixed assets.
- By 2021, the ratio improved slightly to 4.31, reflecting more efficient utilization of fixed assets.
- In 2022, the ratio decreased to 3.61, suggesting a decline in the efficiency of generating sales from fixed assets.
- However, data for 2023 and 2024 is not available (denoted as "—"), making it challenging to assess the trend for those years.
2. Total Asset Turnover:
- The total asset turnover ratio measures how well a company utilizes all its assets to generate revenue. Sonoco's total asset turnover has displayed fluctuations over the years:
- In 2020, the ratio was 0.99, indicating that Sonoco generated $0.99 in revenue for every dollar invested in total assets.
- By 2021, the ratio improved to 1.10, suggesting better asset utilization and increased revenue generation.
- In 2022, the ratio decreased to 1.02, indicating a slight decline in the efficiency of utilizing total assets to generate sales.
- The trend continued as the ratio dropped to 0.94 in 2023, indicating a further reduction in asset turnover efficiency.
- Notably, in 2024, the total asset turnover ratio significantly decreased to 0.42, signifying a considerable decrease in the company's ability to generate sales from its total assets.
In summary, Sonoco's fixed asset turnover has shown fluctuations, with varying levels of efficiency in utilizing fixed assets to generate revenue. Meanwhile, the total asset turnover ratio has exhibited mixed trends, with improvements in some years but significant declines in later periods, indicating potential challenges in maximizing sales from the company's total asset base.