Westlake Chemical Corporation (WLK)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 6.37 | 6.24 | 6.63 | 6.25 | 6.28 | 5.63 | 5.08 | 4.89 | 5.89 | 6.69 | 7.39 | 6.99 | 7.06 | 7.81 | 7.71 | 7.26 | 7.33 | 7.58 | 7.45 | 6.63 |
| Receivables turnover | 7.84 | 6.72 | 7.47 | 8.23 | 8.77 | 7.34 | 5.96 | 5.73 | 6.31 | 6.23 | 5.86 | 5.98 | 6.18 | 5.74 | 6.54 | 6.34 | 7.84 | 7.52 | 6.94 | 7.59 |
| Payables turnover | 11.78 | 12.87 | 13.82 | 13.91 | 13.18 | 11.47 | 8.97 | 9.04 | 9.42 | 10.47 | 10.69 | 11.08 | 12.09 | 14.48 | 14.68 | 15.73 | 14.50 | 13.84 | 13.22 | 12.35 |
| Working capital turnover | 3.29 | 3.18 | 3.33 | 3.79 | 4.30 | 4.40 | 4.31 | 4.72 | 4.03 | 2.26 | 3.07 | 3.29 | 3.54 | 3.43 | 3.69 | 2.92 | 5.41 | 3.67 | 6.28 | 6.07 |
The activity ratios of Westlake Corporation for the last eight quarters show fluctuations in its operational efficiency and liquidity management.
Inventory turnover has remained relatively stable around 6 times per year, indicating that the company effectively manages its inventory levels and efficiently converts inventory into sales.
Receivables turnover has shown some variability, decreasing slightly in Q3 2023 compared to the previous quarter. This ratio reflects how quickly the company collects outstanding receivables from its customers. Westlake Corporation has generally been able to collect receivables in a timely manner, although there was a slight dip in the most recent quarter.
Payables turnover has been consistent, averaging around 12 times per year over the last year. This ratio indicates how quickly the company pays its suppliers. A higher turnover rate suggests that the company is able to manage its payables efficiently and negotiate favorable credit terms with suppliers.
Working capital turnover has shown a decreasing trend over the quarters, indicating that the company is generating less revenue relative to its working capital. This could signify potential inefficiencies in managing its current assets and liabilities to drive sales growth.
Overall, the analysis of Westlake Corporation's activity ratios suggests that the company has been maintaining stable inventory management and collections practices. However, there may be some areas for improvement in optimizing working capital efficiency to enhance overall operational performance.
Average number of days
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 57.32 | 58.49 | 55.02 | 58.39 | 58.11 | 64.80 | 71.92 | 74.70 | 62.00 | 54.60 | 49.42 | 52.18 | 51.70 | 46.75 | 47.33 | 50.27 | 49.82 | 48.16 | 49.02 | 55.08 |
| Days of sales outstanding (DSO) | days | 46.57 | 54.35 | 48.84 | 44.37 | 41.62 | 49.75 | 61.27 | 63.70 | 57.89 | 58.55 | 62.27 | 61.09 | 59.05 | 63.59 | 55.78 | 57.54 | 46.58 | 48.52 | 52.59 | 48.08 |
| Number of days of payables | days | 30.99 | 28.37 | 26.41 | 26.25 | 27.68 | 31.83 | 40.71 | 40.36 | 38.73 | 34.88 | 34.16 | 32.95 | 30.19 | 25.21 | 24.87 | 23.20 | 25.17 | 26.37 | 27.61 | 29.56 |
To analyze Westlake Corporation's activity ratios based on the provided data, we will focus on the following key metrics:
1. Days of Inventory on Hand (DOH):
- The trend for DOH shows a fluctuating pattern over the past eight quarters. In Q4 2023, the company held inventory for 57.32 days, which decreased compared to the previous quarter. However, when compared to the same quarter in the previous year, the DOH has slightly improved, suggesting a more efficient management of inventory levels.
2. Days of Sales Outstanding (DSO):
- The DSO metric indicates the average number of days it takes for the company to collect payments after making a sale. From Q1 2022 to Q4 2023, Westlake Corporation experienced fluctuations in DSO. In Q4 2023, the DSO decreased to 46.57 days, showing an improvement in collecting receivables compared to the previous quarter.
3. Number of Days of Payables:
- The data on the number of days of payables highlights the average time Westlake Corporation takes to pay its outstanding invoices. The trend in payables days has been relatively consistent over the past two years, with a slight decrease in Q4 2023 compared to the previous quarter. This suggests that the company may be managing its payables effectively to maintain good relationships with suppliers.
In conclusion, the analysis of Westlake Corporation's activity ratios reveals varying trends in inventory management, receivables collection, and payables turnover over the past eight quarters. Overall, the company has shown some improvements in inventory and receivables management, which may positively impact its overall working capital efficiency.
Long-term
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed asset turnover | 1.47 | 1.52 | 1.62 | 1.77 | 1.86 | 1.93 | 1.82 | 1.63 | 1.55 | 1.46 | 1.31 | 1.15 | 1.08 | 1.08 | 1.10 | 1.17 | 1.17 | 1.20 | 1.23 | 1.27 |
| Total asset turnover | 0.60 | 0.61 | 0.66 | 0.73 | 0.77 | 0.78 | 0.74 | 0.68 | 0.64 | 0.60 | 0.62 | 0.56 | 0.54 | 0.54 | 0.56 | 0.57 | 0.61 | 0.63 | 0.69 | 0.70 |
Long-term activity ratios provide insight into how efficiently a company is utilizing its assets to generate revenue.
1. Fixed Asset Turnover:
- Westlake Corporation's fixed asset turnover ratio has been gradually decreasing over the past eight quarters, from 1.85 in Q4 2022 to 1.47 in Q4 2023. This suggests that the company is generating less revenue per dollar of fixed assets invested over time.
- A declining fixed asset turnover ratio may indicate that the company's fixed assets are not being efficiently utilized to generate sales, which could be a concern for investors and lenders.
- It is important for Westlake Corporation to closely monitor its fixed asset turnover and consider strategies to improve the productivity of its fixed assets to enhance long-term profitability.
2. Total Asset Turnover:
- The total asset turnover ratio of Westlake Corporation has also shown a decreasing trend, from 0.77 in Q4 2022 to 0.60 in Q4 2023. This indicates that the company is generating less revenue for each dollar of total assets held.
- A declining total asset turnover ratio may signify inefficiencies in utilizing both fixed and current assets to generate sales. This could be a red flag for investors as it suggests that the company may not be maximizing its asset utilization effectively.
- Westlake Corporation should focus on improving its overall asset turnover by streamlining operations, optimizing asset allocations, and enhancing overall efficiency to drive long-term growth and profitability.
In conclusion, Westlake Corporation's long-term activity ratios point towards a decline in asset utilization efficiency over the past year, which could impact the company's financial performance and sustainability. Monitoring and improving these ratios are crucial for enhancing operational efficiency and maximizing returns for shareholders.