Valvoline Inc (VVV)

Short-term

Turnover ratios

Valvoline Inc's activity ratios provide insights into the efficiency of the company's management of its assets and liabilities.

1. Inventory turnover: The inventory turnover ratio measures how many times a company sells and replaces its inventory within a specific period. Valvoline's inventory turnover has shown a fluctuating trend over the periods analyzed, with significant variations observed. The ratios have ranged from negative values to high positive values, indicating periods of efficient inventory management and potentially inefficient management. For instance, in Q1 2024 and Q4 2022, the inventory turnover was notably high, suggesting that the company was effectively managing its inventory levels and quickly converting them into sales. However, there were periods, such as Q3 2023, where the turnover was negative, indicating potential challenges in managing inventory efficiently.

2. Receivables turnover: The receivables turnover ratio reflects how quickly a company collects cash from its credit sales. Valvoline's receivables turnover ratios have also displayed variability across the periods. The ratios have fluctuated between positive and negative values, with some periods indicating efficient collection processes and others highlighting potential delays. Notably, in Q2 2023, the receivables turnover improved significantly, suggesting an efficient collection of receivables during that period.

3. Payables turnover: The payables turnover ratio assesses how quickly a company pays its suppliers. Unfortunately, the data provided does not include information on Valvoline's payables turnover, which limits the analysis of its efficiency in managing payables.

4. Working capital turnover: The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales. Valvoline's working capital turnover ratios have shown a diverse pattern over the periods reviewed. The ratios have fluctuated, indicating variations in the company's ability to generate sales relative to its working capital levels. For example, in Q3 2022 and Q4 2022, the working capital turnover was notably high, reflecting effective utilization of working capital to drive sales.

In conclusion, the analysis of Valvoline Inc's activity ratios highlights fluctuations in its efficiency in managing inventory, receivables, and working capital over the periods provided. The company may benefit from a more consistent approach to optimizing these ratios to enhance its overall financial performance and operational effectiveness.

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Average number of days

Looking at the activity ratios for Valvoline Inc over the past few quarters, we see the following trends:

1. Days of Inventory on Hand (DOH):
- In Q1 2024, Valvoline had 12.45 days of inventory on hand, showing efficient management of inventory levels.
- However, in Q1 2023, the DOH was much higher at 31.66 days, indicating slower inventory turnover.
- Overall, Valvoline has shown improvement in managing its inventory levels as evidenced by the decreasing trend in DOH.

2. Days of Sales Outstanding (DSO):
- The DSO for Valvoline has been relatively consistent over the quarters, with Q2 2023 showing a significant spike to 131.65 days.
- This high DSO in Q2 2023 may indicate potential issues with collecting revenues in a timely manner.
- While the DSO has fluctuated, Valvoline should focus on improving its credit and collection policies to reduce the number of days it takes to collect sales.

3. Number of Days of Payables:
- No data is available for the number of days of payables for Valvoline across the quarters, making it difficult to analyze the company's payment practices to suppliers.
- It would be beneficial for Valvoline to provide this information in future financial reports to allow for a comprehensive analysis of its working capital management.

In conclusion, Valvoline Inc has shown improvements in managing its inventory levels based on the decreasing trend in DOH. However, it faces challenges in collecting sales revenues efficiently, as indicated by the fluctuating DSO. The absence of data on the number of days of payables hinders a complete assessment of the company's activity ratios.

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Long-term

The fixed asset turnover ratio for Valvoline Inc has shown some fluctuations over the past eight quarters, ranging from a low of -0.54 in Q3 2023 to a high of 4.05 in Q3 2022. A high fixed asset turnover ratio indicates that the company is generating significant sales relative to its investment in fixed assets, which is generally seen as positive efficiency in asset utilization.

On the other hand, the total asset turnover ratio has also displayed variability, with a low of -0.14 in Q3 2023 and a high of 1.06 in Q3 2022. This ratio reflects the company's ability to generate sales from its total assets, including both fixed and current assets. A higher total asset turnover ratio suggests that the company is effectively utilizing all its assets to generate sales.

Overall, the trends in the fixed asset turnover and total asset turnover ratios for Valvoline Inc indicate fluctuations in the efficiency of asset utilization over the past eight quarters. The company should focus on maintaining a balance between its fixed asset investment and sales generation to optimize its overall performance and profitability.