Sensient Technologies Corporation (SXT)

Short-term

Turnover ratios

Sensient Technologies Corp.'s activity ratios provide insight into how efficiently the company manages its inventory, receivables, payables, and working capital.

- Inventory turnover has been relatively stable, ranging from 1.65 to 1.68 over the past eight quarters. This suggests that the company is able to efficiently sell its inventory, with a slight decline in turnover in recent quarters.

- Receivables turnover indicates how quickly the company collects payments from customers. The ratio has shown some variability, but overall, it has remained between 4.64 and 5.35. This suggests that Sensient Technologies Corp. effectively manages its receivables, with a higher turnover in the latest quarter.

- Payables turnover reflects the speed at which the company pays its suppliers. The ratio has also fluctuated but has generally improved, increasing from 6.60 to 8.87. This indicates that the company is taking longer to pay its suppliers, potentially improving its cash flow position.

- Working capital turnover measures how efficiently the company utilizes its working capital to generate sales. The ratio has generally been stable, ranging from 1.95 to 2.53. This suggests that Sensient Technologies Corp. effectively leverages its working capital to generate revenue, with a slight decrease in turnover in recent quarters.

In conclusion, Sensient Technologies Corp. demonstrates efficient management of its inventory, receivables, payables, and working capital, as evidenced by relatively consistent turnover ratios across the quarters. The company's ability to effectively manage these key components of its operations bodes well for its financial health and operational efficiency.

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Average number of days

Sensient Technologies Corp.'s activity ratios provide insights into its inventory management, accounts receivable collection, and accounts payable payment processes.

1. Days of Inventory on Hand (DOH): This ratio measures how many days, on average, the company holds its inventory before selling it. The trend in Sensient Technologies Corp.'s DOH indicates a slight increase from Q1 2022 to Q4 2023, reaching a peak in Q2 2023 before decreasing slightly. This suggests that the company may be carrying more inventory than necessary, which can tie up capital and potentially lead to increased holding costs.

2. Days of Sales Outstanding (DSO): DSO reflects the average number of days it takes for the company to collect payment on its credit sales. The trend in Sensient Technologies Corp.'s DSO shows some fluctuations but remains relatively stable over the quarters, indicating a consistent collection process. However, the increase in Q4 2023 compared to the previous quarters may suggest a need for improved credit control or more timely collections efforts.

3. Number of Days of Payables: This ratio represents how long, on average, the company takes to pay its suppliers. Sensient Technologies Corp.'s trend in the number of days of payables shows fluctuations throughout the quarters but overall remains within a reasonable range. The decrease in Q4 2023 compared to Q3 and Q2 2023 indicates a more efficient accounts payable management process, potentially benefiting from negotiating better payment terms with suppliers.

In conclusion, Sensient Technologies Corp. should focus on optimizing its inventory levels to avoid excess holding costs, maintaining consistent efforts to collect receivables promptly to improve cash flow, and continuing to effectively manage payables to enhance working capital management.

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Long-term

The fixed asset turnover ratio for Sensient Technologies Corp. has been relatively stable over the quarters, ranging from 2.87 to 2.97, indicating that the company generates around $2.87 to $2.97 in revenue for every dollar invested in fixed assets. The slight fluctuations in the ratio are not significant and suggest that the company is effectively leveraging its fixed assets to generate sales.

In contrast, the total asset turnover ratio has also shown consistency, hovering around 0.72 to 0.73. This indicates that Sensient Technologies Corp. is generating approximately $0.72 to $0.73 in revenue for every dollar of total assets it owns. The stability of this ratio suggests that the company is efficiently utilizing its total assets to generate sales.

Overall, both the fixed asset turnover and total asset turnover ratios for Sensient Technologies Corp. demonstrate a consistent and efficient use of assets to drive revenue generation over the quarters analyzed.