Westlake Chemical Corporation (WLK)
Fixed asset turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 12,548,000 | 15,794,000 | 11,778,000 | 7,504,000 | 8,118,000 |
| Property, plant and equipment | US$ in thousands | 8,519,000 | 8,477,000 | 7,606,000 | 6,920,000 | 6,912,000 |
| Fixed asset turnover | 1.47 | 1.86 | 1.55 | 1.08 | 1.17 |
December 31, 2023 calculation
Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $12,548,000K ÷ $8,519,000K
= 1.47
Westlake Corporation's fixed asset turnover has fluctuated over the past five years. The ratio measures how efficiently the company generates revenue from its fixed assets. A higher fixed asset turnover ratio indicates better utilization of fixed assets to generate sales revenue.
In 2023, the fixed asset turnover was 1.47, a decrease from the previous year's ratio of 1.85. This suggests that the company generated $1.47 in revenue for every dollar invested in fixed assets, showing a slight decrease in asset utilization efficiency compared to the prior year.
In 2022, the fixed asset turnover was at its peak of 1.85, indicating that the company efficiently generated revenue from its fixed assets. This improvement from the previous years reflects better asset management and operations efficiency.
In 2021 and 2019, the fixed asset turnover ratios were 1.55 and 1.17 respectively. These ratios show moderate efficiency in utilizing fixed assets to generate revenue.
However, in 2020, the fixed asset turnover ratio dropped to 1.08, indicating a significant decline in asset utilization efficiency compared to the previous years. This could be a red flag and may require further investigation into the company's operations and asset management strategies.
Overall, Westlake Corporation's fixed asset turnover has shown variability over the years, with fluctuations in asset efficiency. It is essential for the company to analyze the reasons behind these fluctuations and take corrective measures to optimize the utilization of its fixed assets for generating revenue.
Peer comparison
Dec 31, 2023