Sensient Technologies Corporation (SXT)

Working capital turnover

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Revenue US$ in thousands 1,557,370 1,430,740 1,422,220 1,367,390 1,317,440
Total current assets US$ in thousands 961,886 936,616 934,780 741,153 741,586
Total current liabilities US$ in thousands 270,639 236,306 272,153 232,305 215,955
Working capital turnover 2.25 2.04 2.15 2.69 2.51

December 31, 2024 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $1,557,370K ÷ ($961,886K – $270,639K)
= 2.25

Sensient Technologies Corporation's working capital turnover has exhibited fluctuations over the past five years. The turnover ratio, which measures the efficiency of the company in utilizing its working capital to generate sales, saw an increase from 2.51 in December 2020 to 2.69 in December 2021, indicating improved efficiency in converting working capital into revenue.

However, the ratio experienced a decline in subsequent years, dropping to 2.15 in December 2022, further declining to 2.04 in December 2023. This downtrend suggests potential inefficiencies in managing working capital during these periods.

In December 2024, there was a slight improvement as the working capital turnover ratio increased to 2.25. While the ratio is above 2, indicating that Sensient Technologies Corporation is turning over its working capital more than twice a year, management may want to focus on strategies to sustain or enhance this efficiency to optimize the utilization of working capital and enhance overall financial performance.