Olympic Steel Inc (ZEUS)

Short-term

Turnover ratios

Olympic Steel Inc.'s activity ratios provide insights into the efficiency of the company's operations in managing its assets and liabilities.

1. Inventory Turnover: The inventory turnover ratio indicates how efficiently the company is selling its inventory. Olympic Steel Inc.'s inventory turnover has been relatively stable over the past eight quarters, ranging from 4.18 to 4.97, with Q1 2023 showing the highest turnover rate at 4.83. This consistency suggests the company is effectively managing its inventory levels.

2. Receivables Turnover: The receivables turnover ratio reflects how quickly the company collects payments from its customers. Olympic Steel Inc.'s receivables turnover has shown slight fluctuations, with Q4 2022 and Q4 2023 having the highest turnover rates at 11.65 and 11.29, respectively. This indicates that the company is efficient in collecting payments owed by customers.

3. Payables Turnover: The payables turnover ratio measures how quickly the company pays its suppliers. Olympic Steel Inc.'s payables turnover has also varied, with Q4 2022 showing the lowest turnover rate at 12.25, while Q1 2022 had the highest at 20.44. A lower turnover rate may indicate that the company is taking longer to pay its creditors.

4. Working Capital Turnover: The working capital turnover ratio evaluates how effectively the company utilizes its working capital to generate sales. Olympic Steel Inc.'s working capital turnover has remained relatively consistent, with values ranging from 4.28 to 5.19. A higher turnover rate suggests that the company is efficient in using its working capital to support its operations and generate revenue.

Overall, Olympic Steel Inc. demonstrates consistent efficiency in managing its inventory, collecting payments from customers, and utilizing working capital. However, the company's payables turnover fluctuates, which may warrant further investigation into its payment policies and relationships with suppliers.

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Average number of days

Olympic Steel Inc.'s activity ratios, specifically the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables, provide insights into the efficiency of the company's operations and management of working capital.

Looking at the trend in DOH, there has been a slight increase in the number of days of inventory on hand over the past four quarters, indicating a longer time taken to convert inventory into sales. This could potentially tie up more capital in inventory and raise concerns about excess or slow-moving inventory levels.

In terms of DSO, there is variability in the number of days it takes for the company to collect its accounts receivable. Although the trend has been relatively stable, with some fluctuations, Olympic Steel Inc. should focus on maintaining a balance between timely collection of receivables to improve cash flow and customer relationships.

The number of days of payables highlights the time it takes for the company to pay its suppliers. The data show that Olympic Steel Inc. has been extending the payment period to its suppliers over the past quarters, potentially benefiting from improved cash flow management. However, it's essential to ensure that this strategy does not negatively impact supplier relationships or result in missed opportunities for discounts.

Overall, by monitoring and managing these activity ratios, Olympic Steel Inc. can enhance its operational efficiency, optimize working capital management, and drive sustainable growth and profitability in the long run.

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Long-term

Olympic Steel Inc.'s long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into the company's efficiency in utilizing its assets to generate revenues.

The fixed asset turnover ratio measures how efficiently the company is utilizing its fixed assets to generate sales. Olympic Steel Inc.'s fixed asset turnover has exhibited a decreasing trend over the past eight quarters, from 17.26 in Q4 2022 to 11.60 in Q4 2023. This implies that the company is generating fewer sales per dollar invested in fixed assets. The declining trend may suggest potential inefficiencies in the utilization of fixed assets, which could impact the company's profitability in the long run.

On the other hand, the total asset turnover ratio indicates the company's overall efficiency in generating sales from all its assets, including fixed and current assets. Olympic Steel Inc.'s total asset turnover has also shown a decreasing trend, declining from 2.87 in Q4 2022 to 2.19 in Q4 2023. This decline suggests that the company's ability to generate sales from its total assets has weakened over the quarters. It may indicate challenges in efficiently utilizing both fixed and current assets to drive revenue growth.

In summary, Olympic Steel Inc.'s long-term activity ratios reflect a concerning trend of declining efficiency in asset utilization, both in terms of fixed assets and total assets. The company may need to assess and improve its operational performance and asset utilization strategies to enhance its profitability and overall financial performance in the long term.