Analysis of Short-term (Operating) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Steel Dynamics Inc., short-term (operating) activity ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Steel Dynamics Inc. inventory turnover ratio deteriorated from 2019 to 2020 and from 2020 to 2021. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Steel Dynamics Inc. receivables turnover ratio deteriorated from 2019 to 2020 and from 2020 to 2021. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Steel Dynamics Inc. payables turnover ratio decreased from 2019 to 2020 and from 2020 to 2021. |
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Steel Dynamics Inc. working capital turnover ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level. |
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Steel Dynamics Inc. number of days of inventory outstanding deteriorated from 2019 to 2020 and from 2020 to 2021. |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Steel Dynamics Inc. number of days of receivables outstanding deteriorated from 2019 to 2020 and from 2020 to 2021. |
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Steel Dynamics Inc. operating cycle deteriorated from 2019 to 2020 and from 2020 to 2021. |
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Steel Dynamics Inc. number of days of payables outstanding increased from 2019 to 2020 and from 2020 to 2021. |
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Steel Dynamics Inc. cash conversion cycle deteriorated from 2019 to 2020 and from 2020 to 2021. |
Inventory Turnover
Steel Dynamics Inc., inventory turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Costs of goods sold | 13,046,426) | 8,166,754) | 8,934,007) | 9,499,025) | 7,956,783) | |
| Inventories | 3,531,130) | 1,843,548) | 1,689,043) | 1,859,168) | 1,519,347) | |
| Short-term Activity Ratio | ||||||
| Inventory turnover1 | 3.69 | 4.43 | 5.29 | 5.11 | 5.24 | |
| Benchmarks | ||||||
| Inventory Turnover, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 3.12 | 2.99 | 3.22 | — | — | |
| Inventory Turnover, Industry | ||||||
| Materials | 5.07 | 4.81 | 5.16 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Inventory turnover = Costs of goods sold ÷ Inventories
= 13,046,426 ÷ 3,531,130 = 3.69
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Steel Dynamics Inc. inventory turnover ratio deteriorated from 2019 to 2020 and from 2020 to 2021. |
Receivables Turnover
Steel Dynamics Inc., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 18,408,850) | 9,601,482) | 10,464,991) | 11,821,839) | 9,538,797) | |
| Accounts receivable, net of allowances for credit losses | 1,916,434) | 971,918) | 844,336) | 1,043,756) | 868,837) | |
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | 9.61 | 9.88 | 12.39 | 11.33 | 10.98 | |
| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 19.56 | 15.92 | 19.44 | — | — | |
| Receivables Turnover, Industry | ||||||
| Materials | 9.46 | 8.19 | 8.42 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Receivables turnover = Net sales ÷ Accounts receivable, net of allowances for credit losses
= 18,408,850 ÷ 1,916,434 = 9.61
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Steel Dynamics Inc. receivables turnover ratio deteriorated from 2019 to 2020 and from 2020 to 2021. |
Payables Turnover
Steel Dynamics Inc., payables turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Costs of goods sold | 13,046,426) | 8,166,754) | 8,934,007) | 9,499,025) | 7,956,783) | |
| Accounts payable | 1,280,555) | 769,455) | 513,344) | 550,754) | 489,448) | |
| Short-term Activity Ratio | ||||||
| Payables turnover1 | 10.19 | 10.61 | 17.40 | 17.25 | 16.26 | |
| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 6.89 | 7.91 | 7.92 | — | — | |
| Payables Turnover, Industry | ||||||
| Materials | 5.70 | 5.92 | 6.05 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Payables turnover = Costs of goods sold ÷ Accounts payable
= 13,046,426 ÷ 1,280,555 = 10.19
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Steel Dynamics Inc. payables turnover ratio decreased from 2019 to 2020 and from 2020 to 2021. |
Working Capital Turnover
Steel Dynamics Inc., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 6,901,023) | 4,258,447) | 4,253,025) | 4,032,657) | 3,508,342) | |
| Less: Current liabilities | 2,227,369) | 1,258,787) | 1,006,698) | 1,019,137) | 868,519) | |
| Working capital | 4,673,654) | 2,999,660) | 3,246,327) | 3,013,520) | 2,639,823) | |
| Net sales | 18,408,850) | 9,601,482) | 10,464,991) | 11,821,839) | 9,538,797) | |
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | 3.94 | 3.20 | 3.22 | 3.92 | 3.61 | |
| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 2.56 | 2.41 | 3.06 | — | — | |
| Working Capital Turnover, Industry | ||||||
| Materials | 9.83 | 13.50 | 14.71 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Working capital turnover = Net sales ÷ Working capital
= 18,408,850 ÷ 4,673,654 = 3.94
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Steel Dynamics Inc. working capital turnover ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level. |
Average Inventory Processing Period
Steel Dynamics Inc., average inventory processing period calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Inventory turnover | 3.69 | 4.43 | 5.29 | 5.11 | 5.24 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average inventory processing period1 | 99 | 82 | 69 | 71 | 70 | |
| Benchmarks (no. days) | ||||||
| Average Inventory Processing Period, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 117 | 122 | 113 | — | — | |
| Average Inventory Processing Period, Industry | ||||||
| Materials | 72 | 76 | 71 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 3.69 = 99
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Steel Dynamics Inc. number of days of inventory outstanding deteriorated from 2019 to 2020 and from 2020 to 2021. |
Average Receivable Collection Period
Steel Dynamics Inc., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | 9.61 | 9.88 | 12.39 | 11.33 | 10.98 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | 38 | 37 | 29 | 32 | 33 | |
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 19 | 23 | 19 | — | — | |
| Average Receivable Collection Period, Industry | ||||||
| Materials | 39 | 45 | 43 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 9.61 = 38
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Steel Dynamics Inc. number of days of receivables outstanding deteriorated from 2019 to 2020 and from 2020 to 2021. |
Operating Cycle
Steel Dynamics Inc., operating cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 99 | 82 | 69 | 71 | 70 | |
| Average receivable collection period | 38 | 37 | 29 | 32 | 33 | |
| Short-term Activity Ratio | ||||||
| Operating cycle1 | 137 | 119 | 98 | 103 | 103 | |
| Benchmarks | ||||||
| Operating Cycle, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 136 | 145 | 132 | — | — | |
| Operating Cycle, Industry | ||||||
| Materials | 111 | 121 | 114 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 99 + 38 = 137
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Steel Dynamics Inc. operating cycle deteriorated from 2019 to 2020 and from 2020 to 2021. |
Average Payables Payment Period
Steel Dynamics Inc., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | 10.19 | 10.61 | 17.40 | 17.25 | 16.26 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | 36 | 34 | 21 | 21 | 22 | |
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 53 | 46 | 46 | — | — | |
| Average Payables Payment Period, Industry | ||||||
| Materials | 64 | 62 | 60 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 10.19 = 36
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Steel Dynamics Inc. number of days of payables outstanding increased from 2019 to 2020 and from 2020 to 2021. |
Cash Conversion Cycle
Steel Dynamics Inc., cash conversion cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 99 | 82 | 69 | 71 | 70 | |
| Average receivable collection period | 38 | 37 | 29 | 32 | 33 | |
| Average payables payment period | 36 | 34 | 21 | 21 | 22 | |
| Short-term Activity Ratio | ||||||
| Cash conversion cycle1 | 101 | 85 | 77 | 82 | 81 | |
| Benchmarks | ||||||
| Cash Conversion Cycle, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 83 | 99 | 86 | — | — | |
| Cash Conversion Cycle, Industry | ||||||
| Materials | 47 | 59 | 54 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 99 + 38 – 36 = 101
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Steel Dynamics Inc. cash conversion cycle deteriorated from 2019 to 2020 and from 2020 to 2021. |