Westlake Chemical Corporation (WLK)

Short-term

Turnover ratios

Westlake Chemical Corporation's inventory turnover ratio shows a fluctuating trend over the analyzed period, ranging between 4.89 to 7.81. The ratio indicates the number of times the company's inventory is sold and replaced over a given period. The decreasing trend in more recent periods may indicate potential inefficiencies in managing inventory levels.

The receivables turnover ratio demonstrates a general downward trend initially, before increasing substantially in the latter periods, reaching a peak of 8.77 by December 31, 2022. This ratio reflects how efficiently the company collects on credit extended to customers. The significant increase in the ratio towards the end of the period could suggest improved collection efforts or a change in credit policies.

On the other hand, payables turnover ratios reflect the company's ability to manage its trade credit and pay off its obligations. Westlake Chemical Corporation's payables turnover ratio shows a decreasing trend over the analyzed period, signaling that the company is taking longer to pay off its trade payables. A decreasing trend in payables turnover may indicate potential liquidity constraints or changes in the company's payment practices.

The working capital turnover ratio, which measures how effectively a company utilizes its working capital to generate sales, shows a declining trend over the period. The decreasing trend in this ratio may indicate that the company's working capital is becoming less effective in generating sales revenue, potentially signaling operational challenges or inefficiencies.

In summary, while the receivables turnover ratio shows significant improvement and inventory turnover remains relatively stable, the declining trends in payables turnover and working capital turnover ratios may raise concerns about Westlake Chemical Corporation's efficiency in managing its payables and working capital. Further analysis and contextual information would be needed to fully interpret the implications of these trends on the company's financial performance.

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Average number of days

Based on the provided data on activity ratios for Westlake Chemical Corporation, we can observe the following trends:

1. Days of Inventory on Hand (DOH):
- The days of inventory on hand have shown fluctuations over the periods reported.
- The trend indicates an increase in the DOH from March 31, 2020, to December 31, 2022, followed by a slight decrease in the subsequent periods.
- Generally, a higher DOH suggests that the company is holding onto inventory for a longer period before selling it, which could tie up capital and indicate inefficiencies in inventory management.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding have varied during the reported periods.
- There was an increase in DSO from September 30, 2022, to June 30, 2023, followed by a decrease in the most recent periods.
- A higher DSO implies that the company is taking longer to collect its accounts receivable, which could indicate potential issues with credit policies or difficulties in collecting payments.

3. Number of Days of Payables:
- The number of days of payables has shown some fluctuations over the reporting periods.
- There was a consistent increase in days of payables from March 31, 2020, to December 31, 2023, with a small decrease by September 30, 2024.
- A higher number of days of payables suggests that the company is taking longer to pay its suppliers, which could indicate the company's ability to manage its working capital effectively.

In conclusion, the trends in the activity ratios of Westlake Chemical Corporation indicate changes in inventory management efficiency, accounts receivable collection, and accounts payable management over the reported periods. Further analysis and comparison with industry averages would provide additional insights into the company's operational performance.

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Long-term

The fixed asset turnover ratio for Westlake Chemical Corporation has shown a generally increasing trend over the years, indicating that the company is generating more revenue per dollar of fixed assets invested. This suggests improved efficiency in utilizing fixed assets to generate sales.

On the other hand, the total asset turnover ratio has been relatively stable, with some fluctuations, but without a clear trend. This ratio measures the company's ability to generate sales from its total assets. The stable nature of the total asset turnover indicates that Westlake Chemical Corporation has been maintaining a consistent level of sales relative to its total asset base.

In summary, the fixed asset turnover ratio improvement suggests that Westlake Chemical Corporation has been effectively utilizing its fixed assets to boost sales, while the stable total asset turnover ratio indicates a consistent performance in generating revenue from its total asset base.