Steel Dynamics Inc (STLD)

Fixed asset turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	18,718,800	22,260,800	18,408,800	9,601,480	10,465,000
Property, plant and equipment	US$ in thousands	6,734,220	5,373,660	4,751,430	4,105,570	3,135,890
Fixed asset turnover		2.78	4.14	3.87	2.34	3.34

December 31, 2023 calculation

Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $18,718,800K ÷ $6,734,220K
= 2.78

The fixed asset turnover ratio for Steel Dynamics Inc. has shown fluctuations over the past five years. The company's fixed asset turnover was 3.34 in 2019, increased significantly to 4.14 in 2020, decreased to 2.34 in 2021, and then rebounded to 3.87 in 2022. In the most recent period ending on December 31, 2023, the fixed asset turnover ratio stands at 2.79.

The fixed asset turnover ratio measures how effectively a company is utilizing its fixed assets to generate revenue. A higher fixed asset turnover ratio indicates that the company is generating more revenue per dollar of fixed assets, which is generally favorable as it signifies efficient asset utilization.

In the case of Steel Dynamics Inc., the fluctuations in the fixed asset turnover ratio imply varying levels of efficiency in the utilization of its fixed assets over the years. The sharp increase in 2020 suggests improved efficiency, while the decrease in 2021 followed by a rebound in 2022 indicates some instability or changes in asset utilization strategies. The decline to 2.79 in 2023 may raise concerns about potential inefficiencies in the utilization of fixed assets, requiring further investigation.

Overall, Steel Dynamics Inc. should closely monitor its fixed asset turnover ratio to ensure optimal utilization of its fixed assets and strive for consistency or improvement in this aspect of its operational efficiency.