Sensient Technologies Corporation (SXT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.28 | 2.18 | 2.20 | 0.73 | 0.75 |
| Receivables turnover | 5.37 | 5.26 | 4.71 | 5.24 | 5.63 |
| Payables turnover | 9.84 | 9.97 | 8.73 | 2.40 | 2.67 |
| Working capital turnover | 2.25 | 2.04 | 2.15 | 2.69 | 2.51 |
The inventory turnover ratio for Sensient Technologies Corporation has shown an improvement over the years, increasing from 0.75 in 2020 to 2.28 in 2024. This indicates that the company is now managing its inventory more efficiently, turning over its inventory more frequently.
On the other hand, the receivables turnover ratio fluctuated slightly during the period, with a peak of 5.63 in 2020 and a low of 4.71 in 2022. This ratio measures how quickly the company collects its receivables, and the fluctuations may suggest varying effectiveness in managing its accounts receivable.
The payables turnover ratio for the company saw a significant increase from 2.67 in 2020 to 9.84 in 2024. This significant rise indicates that Sensient Technologies Corporation is taking longer to pay its suppliers, potentially improving its working capital position.
Lastly, the working capital turnover ratio has also fluctuated over the years, with the highest value of 2.69 in 2021 and the lowest value of 2.04 in 2023. This ratio demonstrates how effectively the company is using its working capital to generate sales revenue.
In conclusion, the trends in Sensient Technologies Corporation's activity ratios show improvements in inventory turnover and payables turnover, with some fluctuations in receivables turnover and working capital turnover. These ratios provide insights into the company's operational efficiency and management of its working capital cycle.
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 | 160.16 | 167.13 | 165.74 | 499.70 | 485.76 |
| Days of sales outstanding (DSO) | days | 67.99 | 69.43 | 77.53 | 69.70 | 64.87 |
| Number of days of payables | days | 37.10 | 36.62 | 41.83 | 152.37 | 136.71 |
Activity ratios provide insight into how efficiently a company utilizes its assets and manages its operations. Let's analyze Sensient Technologies Corporation's activity ratios based on the provided data:
1. Days of Inventory on Hand (DOH):
- Sensient's DOH has shown a decreasing trend from 2020 to 2024, indicating the company is managing its inventory more efficiently over time.
- In 2024, Sensient had 160.16 days of inventory on hand, which suggests the company is holding less inventory relative to its sales volume compared to previous years.
2. Days of Sales Outstanding (DSO):
- DSO measures how long it takes for a company to collect payments from its customers.
- Sensient's DSO fluctuated over the years but remained relatively stable, with a slight decrease observed from 2023 to 2024.
- In 2024, Sensient collected payments from customers in approximately 67.99 days, indicating efficient management of accounts receivable.
3. Number of Days of Payables:
- The number of days of payables measures how long it takes for a company to pay its suppliers.
- Sensient significantly reduced its days of payables from 2020 to 2022, indicating a more aggressive approach in managing payables.
- The company maintained a relatively stable number of days of payables from 2022 to 2024, hovering around 36-37 days.
In summary, Sensient Technologies Corporation has shown improvements in inventory management efficiency and stable accounts receivable collection practices. The company also effectively managed its payables, optimizing cash flow and relationships with suppliers.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.17 | 2.83 | 2.94 | 3.06 | 2.96 |
| Total asset turnover | 0.77 | 0.71 | 0.72 | 0.78 | 0.76 |
Sensient Technologies Corporation's fixed asset turnover has shown a positive trend over the five-year period, indicating that the company's ability to generate sales from its fixed assets has generally improved. The ratio increased from 2.96 in 2020 to 3.17 in 2024, with a peak of 3.06 in 2021. This suggests that Sensient is efficiently utilizing its fixed assets to support revenue generation.
In contrast, the total asset turnover of Sensient has been somewhat fluctuating over the same period. The ratio ranged from 0.71 in 2023 to 0.78 in 2021, but generally remained within a narrow range. It stood at 0.77 in 2024. This indicates that the company's ability to generate sales from all its assets has been relatively stable, although there was a slight decrease in 2022 compared to the prior years.
Overall, while the fixed asset turnover of Sensient Technologies Corporation has shown a consistent improvement, the total asset turnover has been more stable, suggesting that the company is effectively managing its assets to drive revenue growth.