Steel Dynamics Inc (STLD)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	5.07	5.13	5.14	5.42	5.16	4.70	4.15	4.01	3.69	4.03	4.11	3.95	4.43	5.00	5.21	5.30	5.29	5.25	5.35	5.22
Receivables turnover	11.64	10.30	9.54	10.15	10.83	9.89	8.22	8.51	9.61	8.29	8.24	7.74	9.88	10.18	11.31	10.24	12.39	11.16	10.92	10.53
Payables turnover	—	—	—	14.37	16.03	13.75	11.10	11.72	10.30	9.65	8.75	7.86	10.74	11.44	11.73	14.45	17.53	17.89	18.70	16.73
Working capital turnover	4.20	3.65	3.63	3.76	3.97	4.00	3.99	4.04	3.94	3.99	3.79	3.27	3.20	3.49	3.29	3.29	3.22	3.65	3.78	3.98

Steel Dynamics Inc.'s activity ratios provide insight into how efficiently the company is managing its resources, particularly in terms of inventory, receivables, payables, and working capital.

1. Inventory Turnover:
The inventory turnover ratio reflects how many times a company's inventory is sold and replaced within a given period. Steel Dynamics Inc. maintained a relatively stable inventory turnover rate throughout the quarters, ranging from 5.10 to 5.42. This indicates that the company efficiently manages its inventory levels, ensuring a timely turnover of goods.

2. Receivables Turnover:
The receivables turnover ratio measures how efficiently a company collects its outstanding receivables. Steel Dynamics Inc. showed consistent improvement in this ratio over the quarters, with values ranging from 9.54 to 11.69. This suggests that the company has been effective in collecting payments from customers, potentially improving its cash flow.

3. Payables Turnover:
The payables turnover ratio assesses how quickly a company pays off its suppliers. Steel Dynamics Inc. exhibited a consistent payables turnover ratio ranging from 13.55 to 15.87. This indicates that the company is managing its payables efficiently, maintaining good relationships with suppliers while also effectively utilizing credit terms to manage cash flow.

4. Working Capital Turnover:
The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales revenue. Steel Dynamics Inc. maintained a relatively stable working capital turnover ratio around 4.00, indicating that the company effectively utilizes its resources to generate sales. However, there was a slight decline in this ratio towards the end of Q3 2023 and Q4 2023, which may warrant further investigation into the company's working capital management.

Overall, Steel Dynamics Inc.'s activity ratios demonstrate efficient management of inventory, receivables, payables, and working capital, contributing to the company's operational effectiveness and potentially improving its financial performance.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	71.92	71.17	71.05	67.37	70.77	77.74	87.85	91.11	98.79	90.65	88.75	92.49	82.39	73.04	70.00	68.92	69.01	69.48	68.16	69.97
Days of sales outstanding (DSO)	days	31.36	35.43	38.24	35.97	33.71	36.91	44.43	42.87	38.00	44.01	44.31	47.18	36.95	35.87	32.27	35.65	29.45	32.69	33.43	34.68
Number of days of payables	days	—	—	—	25.40	22.78	26.55	32.89	31.14	35.44	37.84	41.74	46.43	33.99	31.91	31.13	25.26	20.82	20.40	19.51	21.82

Steel Dynamics Inc.'s activity ratios indicate the efficiency of its operations in managing inventory, collecting receivables, and paying off its liabilities.

1. Days of Inventory on Hand (DOH): The company's inventory turnover seems relatively stable over recent quarters, with DOH ranging between 67.37 and 71.63 days in Q4 2023. This suggests that Steel Dynamics Inc. takes approximately 67-72 days to turn its inventory on hand into sales. A lower DOH indicates quicker inventory turnover, which can positively impact cash flow and reduce the risk of obsolete inventory.

2. Days of Sales Outstanding (DSO): Steel Dynamics Inc.'s DSO varies but remains within a reasonable range, indicating that the company takes around 31-39 days to collect outstanding receivables. A lower DSO is generally favorable as it signifies efficient credit and collections management, ensuring quicker cash conversion from sales.

3. Number of Days of Payables: The company's payment cycle to suppliers falls within a range of 24-27 days, demonstrating a consistent trend of paying off liabilities. A longer payment cycle can indicate a better use of trade credit to support working capital.

Overall, despite some fluctuations in these activity ratios over time, Steel Dynamics Inc. appears to maintain a balanced approach in managing its inventory, receivables, and payables, which is crucial for sustaining operational efficiency and financial performance.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	2.78	3.07	3.54	3.93	4.14	4.42	4.54	4.23	3.87	3.37	2.86	2.44	2.34	2.42	2.66	3.07	3.34	3.63	3.98	4.10
Total asset turnover	1.26	1.30	1.41	1.52	1.57	1.62	1.62	1.57	1.47	1.36	1.21	1.04	1.04	1.09	1.13	1.23	1.26	1.39	1.49	1.53

Long-term activity ratios provide insights into how effectively a company is utilizing its assets to generate revenue over an extended period. In the case of Steel Dynamics Inc., the fixed asset turnover ratio has experienced a declining trend from Q1 2022 to Q4 2023, indicating a decrease in the efficiency of generating sales from fixed assets. This could imply that the company may not be effectively utilizing its long-term assets to generate revenue.

On the other hand, the total asset turnover ratio has also shown a decreasing trend over the same period. This suggests that Steel Dynamics Inc. may be becoming less efficient in using all of its assets, both fixed and current, to generate sales. A declining total asset turnover ratio could signify that the company's overall asset utilization is weakening.

Overall, a declining trend in both fixed asset turnover and total asset turnover ratios for Steel Dynamics Inc. indicates potential inefficiencies in asset management and revenue generation. It may be beneficial for the company to review its asset utilization strategies and implement measures to improve efficiency in the long-term utilization of assets to drive revenue growth.