Olympic Steel Inc (ZEUS)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company is managing its assets, accounts receivable, inventory, and accounts payable. Let's analyze the activity ratios of Olympic Steel Inc. over the past five years based on the data provided:

1. Inventory Turnover:
- Olympic Steel Inc.'s inventory turnover has fluctuated over the last five years, ranging from 3.72 to 4.97. A higher inventory turnover ratio indicates that the company is selling its inventory more quickly, which is generally favorable for cash flow and reducing storage costs. However, a declining trend in the ratio could suggest inefficient inventory management or potential overstocking.

2. Receivables Turnover:
- The receivables turnover ratio measures how efficiently a company collects cash from its credit sales. Olympic Steel Inc. has shown a consistent range of receivables turnover ratios between 8.13 and 11.82 over the past five years. A higher ratio signifies that the company is collecting its accounts receivable at a faster pace. A declining ratio could indicate potential issues with collecting outstanding receivables.

3. Payables Turnover:
- The payables turnover ratio reflects how efficiently a company pays off its suppliers. Olympic Steel Inc. has experienced fluctuations in its payables turnover ratio over the years, with figures ranging from 11.22 to 20.44. A higher ratio indicates that the company is managing its payables effectively, possibly taking advantage of trade credit terms. However, a significantly high ratio could signal strained supplier relationships.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company generates sales revenue in relation to its working capital. Olympic Steel Inc. has maintained a relatively stable working capital turnover ratio between 4.09 and 5.19. A higher ratio suggests that the company is effectively utilizing its working capital to generate sales. However, a declining ratio may indicate inefficiencies in working capital management or potential liquidity challenges.

In conclusion, analyzing Olympic Steel Inc.'s activity ratios highlights the company's efficiency in managing inventory, receivables, payables, and working capital over the past five years. Fluctuations in these ratios can provide valuable insights into the company's operational performance and financial health.

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Average number of days

To analyze Olympic Steel Inc.'s activity ratios based on the given data:

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, inventory is held before being sold.
- In 2023, the DOH was 83.75 days, increasing from 73.38 days in 2022.
- Compared to 2021 (98.24 days) and 2020 (89.47 days), the 2023 figure indicates a moderate improvement in managing inventory levels.
- However, the DOH in 2019 was lower at 77.99 days, suggesting a more efficient inventory turnover that year.

2. Days of Sales Outstanding (DSO):
- The DSO shows the average number of days it takes for a company to collect revenue after a sale is made.
- In 2023, the DSO stood at 32.33 days, slightly higher than in 2022 (31.34 days).
- The 2023 DSO is lower than in 2021 (44.92 days) and 2020 (44.84 days), indicating quicker collection of accounts receivable in the most recent year.
- The DSO was even lower in 2019 at 30.88 days, suggesting more efficient collection practices that year.

3. Number of Days of Payables:
- This ratio reflects the average number of days a company takes to pay its suppliers.
- Olympic Steel Inc.'s days of payables increased to 25.94 days in 2023 from 17.85 days in 2022.
- Comparing to 2021 (30.11 days) and 2020 (32.54 days), the 2023 figure suggests a slight improvement in payment terms to suppliers.
- The days of payables in 2019 were lower at 19.80 days, indicating faster payment to suppliers previously.

Overall, Olympic Steel Inc. has shown fluctuations in its activity ratios over the years. The company demonstrated better management of inventory in 2019 and more efficient collection of receivables. However, there has been variability in these ratios in recent years, emphasizing the need for consistent monitoring and adjustment of the company's working capital management.

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Long-term

The long-term activity ratios of Olympic Steel Inc. provide insights into the company's efficiency in utilizing its assets to generate sales. The fixed asset turnover ratio has shown fluctuations over the years, with a peak of 17.26 in 2022 and a low of 7.85 in 2020. This ratio measures how efficiently the company is using its fixed assets to generate revenue, indicating a significant decrease in 2020 followed by a substantial increase in 2022.

On the other hand, the total asset turnover ratio, which evaluates the company's overall asset utilization efficiency, has also seen variations over the years. The highest total asset turnover of 2.87 was recorded in 2022, while the lowest of 1.93 was seen in 2020. This ratio reflects the company's ability to generate sales relative to its total assets, with fluctuations indicating changes in business operations and asset management strategies.

Overall, the trend in both ratios suggests that Olympic Steel Inc. has experienced fluctuations in asset utilization efficiency over the past five years, with varying levels of effectiveness in generating revenue from its fixed and total assets. Further analysis and comparison with industry averages may help provide a more comprehensive understanding of the company's long-term activity performance.