Steel Dynamics Inc (STLD)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.73 | 5.10 | 5.16 | 3.69 | 4.43 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 5.35 | 4.22 | 3.97 | 3.94 | 3.20 |
The activity ratios of Steel Dynamics Inc provide insights into the efficiency of the company's operations.
1. Inventory Turnover:
- The inventory turnover ratio measures how effectively the company is managing its inventory. A higher ratio indicates that inventory is being sold quickly, generating revenue efficiently. Steel Dynamics Inc's inventory turnover has fluctuated over the years, ranging from 3.69 to 5.16. The average inventory turnover rate was about 4.82, showing a satisfactory level of inventory management.
2. Receivables Turnover:
- Receivables turnover reflects how efficiently the company collects payments from its customers. In this case, the data shows that receivables turnover information is unavailable for the specified years, indicating that detailed analysis for this metric is not possible without additional data.
3. Payables Turnover:
- The payables turnover ratio assesses how quickly the company is repaying its suppliers. Similar to receivables turnover, payables turnover data is not provided for the specified years, limiting the ability to evaluate the company's efficiency in managing payables.
4. Working Capital Turnover:
- Working capital turnover ratio measures how efficiently the company is utilizing its working capital to generate sales. Steel Dynamics Inc's working capital turnover has improved steadily from 3.20 to 5.35, indicating that the company has been utilizing its resources effectively to drive revenue growth over the analyzed period.
Overall, while the company's management of inventory and working capital appears efficient based on the available data, additional information on receivables and payables turnover would provide a more comprehensive understanding of Steel Dynamics Inc's operational performance.
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 | 77.12 | 71.63 | 70.77 | 98.79 | 82.39 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Days of Inventory on Hand (DOH):
1. The Days of Inventory on Hand (DOH) measure indicates the average number of days it takes for Steel Dynamics Inc to sell its inventory.
2. The trend over the past five years shows some fluctuations but generally stayed within a range of approximately 70 to 100 days.
3. A decrease in DOH, as seen from 2022 to 2024, suggests the company is managing its inventory more efficiently, potentially reducing storage costs and the risk of inventory obsolescence.
Days of Sales Outstanding (DSO):
1. The absence of data for Days of Sales Outstanding (DSO) indicates that specific information on the average collection period for Steel Dynamics Inc's accounts receivable is not available.
2. DSO is a crucial metric that measures how quickly the company collects payments from its customers, indicating its efficiency in managing credit sales.
3. Without specific DSO data, it is challenging to assess the company's effectiveness in converting credit sales into cash.
Number of Days of Payables:
1. Similar to DSO, the lack of data for the Number of Days of Payables signifies a lack of information on Steel Dynamics Inc's average payment period for its accounts payable.
2. The number of days of payables is essential in assessing the company's payment policies and liquidity management.
3. Without this data, it is difficult to evaluate how effectively the company is utilizing trade credit and managing its cash flow through payment terms.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 4.06 | 3.87 | 2.34 |
| Total asset turnover | 1.17 | 1.26 | 1.57 | 1.47 | 1.04 |
The fixed asset turnover ratio for Steel Dynamics Inc has shown a positive trend, increasing from 2.34 in December 31, 2020, to 4.06 in December 31, 2022. The fixed asset turnover ratio indicates the efficiency with which the company is utilizing its fixed assets to generate sales. The continuous improvement in this ratio suggests that Steel Dynamics Inc has been able to generate more revenue relative to its investment in fixed assets over the years.
On the other hand, the total asset turnover ratio, which measures how efficiently the company is using its total assets to generate revenue, witnessed fluctuations during the period analyzed. It increased from 1.04 in December 31, 2020, to 1.57 in December 31, 2022, indicating an improvement in asset utilization efficiency. However, the ratio then decreased to 1.17 by December 31, 2024. This fluctuation might indicate changes in the company's business operations or asset management strategies during these years.
Overall, a higher fixed asset turnover ratio coupled with a stable or increasing total asset turnover ratio could suggest that Steel Dynamics Inc is effectively managing its assets to generate revenue. However, it's important to consider other financial metrics and industry benchmarks for a more comprehensive evaluation of the company's long-term activity performance.