Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
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)
Albemarle Corp., short-term (operating) activity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
- Inventory Turnover
- The inventory turnover ratio demonstrated fluctuations over the reported periods. Initially, it hovered around 2.7 to 3.0, exhibiting moderate efficiency in inventory management. However, starting from early 2022, a declining trend became evident, with the ratio dropping significantly to 1.53 by March 2023. This suggests a slower movement of inventory, indicating potential challenges in inventory liquidation or accumulation of stock during the most recent quarters.
- Receivables Turnover
- The receivables turnover ratio displayed variability but generally remained within a range of approximately 5.0 to 7.1. Peaks were observed mid-2021 and early 2023, indicating periods of improved collections efficiency. Conversely, there was a notable dip in mid-2022. Overall, the trend indicates some volatility but sustained relative effectiveness in collecting receivables over the periods.
- Payables Turnover
- There was a noticeable downward trend in payables turnover from 2019 through 2023. Starting near 4.5 in early 2019, it gradually decreased to approximately 1.76 by the first quarter of 2023. This decline indicates an increased duration in settling payables, reflecting lengthier payment terms or slower payments to suppliers over time.
- Working Capital Turnover
- The working capital turnover ratio exhibited significant volatility. In 2021, there was a sharp spike reaching as high as 24.9 in December, a clear outlier compared to surrounding periods. Apart from this anomaly, the ratio recorded lower values generally between 2.5 and 7.7. Recently, the working capital turnover has stabilized at lower levels, near 2.7 to 3.1, suggesting constrained utilization of working capital to generate sales.
- Average Inventory Processing Period
- The average inventory processing period lengthened over time, moving from around 120-130 days in 2019 to over 230 days by March 2023. This increase correlates with the declining inventory turnover ratio and represents slower inventory movement, potentially indicating overstocking or diminished sales velocity.
- Average Receivable Collection Period
- This period showed moderate variability, generally ranging between 50 and 80 days. There were peaks, notably in mid-2022, indicating slower collections at that time. However, by early 2023, the average collection period improved to 56 days, indicating a recent uptick in collection efficiency compared to the previous quarters.
- Operating Cycle
- The operating cycle lengthened noticeably over the analyzed period, extending from about 180-200 days in prior years to nearly 295 days by early 2023. This elongation is primarily driven by the increasing inventory processing and collection periods, which collectively suggest a slower overall operational tempo and increased capital lockup.
- Average Payables Payment Period
- The average payables payment period has extended significantly, growing from about 80-90 days in earlier periods to over 200 days by March 2023. This lengthening indicates the company is taking longer to pay its suppliers, which may be a strategic liquidity management action or a sign of strained cash flows.
- Cash Conversion Cycle
- The cash conversion cycle demonstrated fluctuations within a narrower band relative to other metrics, oscillating between approximately 60 and 110 days. It experienced a reduction to around 61 days in late 2022 but subsequently rose to 86 days by early 2023. This cycle reflects the net time taken to convert investments in inventory and receivables into cash, and the recent increase suggests some deterioration in working capital efficiency.
Turnover Ratios
Average No. Days
Inventory Turnover
Albemarle Corp., inventory turnover calculation (quarterly data)
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||
| Cost of goods sold | 1,303,712) | 1,619,659) | 1,047,991) | 899,169) | 678,698) | 657,610) | 581,293) | 525,479) | 565,604) | 613,727) | 492,812) | 530,690) | 496,827) | 654,053) | 569,880) | 559,138) | 548,578) | ||||||
| Inventories | 3,180,825) | 2,076,031) | 1,614,299) | 1,216,213) | 1,013,793) | 812,920) | 745,598) | 732,563) | 685,779) | 750,237) | 828,080) | 851,256) | 853,500) | 768,984) | 802,434) | 814,022) | 756,193) | ||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Inventory turnover1 | 1.53 | 2.05 | 2.03 | 2.32 | 2.41 | 2.87 | 3.07 | 3.00 | 3.21 | 2.84 | 2.63 | 2.64 | 2.67 | 3.03 | 2.84 | 2.71 | 2.90 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Inventory Turnover, Competitors2 | |||||||||||||||||||||||
| Linde plc | 9.29 | 9.83 | 10.75 | 10.66 | 10.36 | 10.12 | 9.86 | 9.56 | 9.20 | — | — | — | — | — | — | — | — | ||||||
| Sherwin-Williams Co. | 4.76 | 4.88 | 4.99 | 5.08 | 5.07 | 5.92 | 5.99 | 5.84 | 5.39 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Inventory turnover
= (Cost of goods soldQ1 2023
+ Cost of goods soldQ4 2022
+ Cost of goods soldQ3 2022
+ Cost of goods soldQ2 2022)
÷ Inventories
= (1,303,712 + 1,619,659 + 1,047,991 + 899,169)
÷ 3,180,825 = 1.53
2 Click competitor name to see calculations.
- Cost of Goods Sold
- The cost of goods sold (COGS) demonstrated variability over the observed periods. Initially, from early 2019 through the end of 2019, COGS increased, peaking notably at the close of 2019. A sharp decline occurred in the first three quarters of 2020, before rising again in late 2020 and continuing an upward trajectory through 2021 and 2022. The increase was especially pronounced in the last two quarters of 2022 and the first quarter of 2023, where COGS reached its highest levels in the dataset. This indicates increased production expense or sales volumes during the most recent periods.
- Inventories
- Inventory levels generally increased over time with some fluctuations. Early in 2019, inventories rose steadily and remained relatively stable through 2019 and the first half of 2020. From late 2020 onwards, inventories exhibited a strong upward trend, accelerating significantly from 2021 through the first quarter of 2023. By the end of the period, inventories more than quadrupled compared to early 2019 levels. The sharp increase in inventories towards the end of the dataset may reflect strategic stockpiling, expansion, or possibly slower inventory turnover.
- Inventory Turnover Ratio
- The inventory turnover ratio showed a decreasing trend overall, especially pronounced toward the end of the dataset. During 2019, the ratio was relatively stable around 2.7 to 3.0 times. A moderate decline appeared through 2020 and into 2021, with some periods showing slight improvement or stabilization. However, starting in 2022, a clear and consistent decline is observable, with the turnover ratio dropping from around 2.4 to as low as 1.53 by the first quarter of 2023. This decrease suggests reduced efficiency in managing inventory relative to cost of goods sold, possibly due to slower sales or overstocking.
- Overall Insights
- The combination of sharply increasing inventories and rising cost of goods sold, alongside declining inventory turnover, suggests a shift in operational dynamics. The firm appears to be holding more inventory relative to its sales or production costs, which may imply potential challenges in demand forecasting or sales performance. The inventory buildup could also indicate preparations for anticipated growth or supply chain disruptions. The downward trend in inventory turnover warrants attention, as it may impact liquidity and operational efficiency if sustained. Monitoring these metrics in future periods will be crucial to assess the effectiveness of inventory and production management strategies.
Receivables Turnover
Albemarle Corp., receivables turnover calculation (quarterly data)
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||
| Net sales | 2,580,252) | 2,620,978) | 2,091,805) | 1,479,593) | 1,127,728) | 894,204) | 830,566) | 773,896) | 829,291) | 879,147) | 746,868) | 764,049) | 738,845) | 992,564) | 879,747) | 885,052) | 832,064) | ||||||
| Trade accounts receivable, less allowance for doubtful accounts | 1,351,915) | 1,190,970) | 1,035,117) | 962,215) | 658,733) | 556,922) | 520,746) | 455,222) | 532,964) | 530,838) | 516,166) | 517,626) | 518,703) | 612,651) | 637,037) | 624,808) | 603,542) | ||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Receivables turnover1 | 6.49 | 6.15 | 5.40 | 4.50 | 5.51 | 5.98 | 6.36 | 7.09 | 6.04 | 5.89 | 6.28 | 6.52 | 6.74 | 5.86 | 5.52 | 5.47 | 5.61 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||||||||||||
| Linde plc | 7.02 | 7.32 | 7.34 | 6.79 | 6.56 | 6.84 | 6.82 | 6.67 | 6.70 | — | — | — | — | — | — | — | — | ||||||
| Sherwin-Williams Co. | 7.77 | 8.64 | 7.48 | 6.97 | 7.29 | 8.48 | 7.57 | 7.58 | 7.82 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Receivables turnover
= (Net salesQ1 2023
+ Net salesQ4 2022
+ Net salesQ3 2022
+ Net salesQ2 2022)
÷ Trade accounts receivable, less allowance for doubtful accounts
= (2,580,252 + 2,620,978 + 2,091,805 + 1,479,593)
÷ 1,351,915 = 6.49
2 Click competitor name to see calculations.
The financial data reveals multiple notable trends across the various quarters analyzed. Overall, net sales demonstrate a pronounced upward trajectory, particularly from early 2022 onward, experiencing substantial growth in each subsequent quarter. This indicates a significant expansion in sales activity over the most recent periods.
Trade accounts receivable show a generally increasing pattern across the periods, with some fluctuations. Initial values start at moderate levels but rise considerably in the last few quarters, especially from mid-2021 through the first quarter of 2023. This rise in receivables suggests growing sales volumes; however, it also warrants attention to working capital management given the accumulation of receivables.
Receivables turnover, which measures how efficiently the company collects its accounts receivable, fluctuates without a clear consistent trend but remains within a relatively narrow band. Earlier periods show higher turnover ratios compared to recent quarters, which dip notably around mid-2022 before rebounding towards early 2023. This variation suggests periods of slower collection at certain times, potentially indicative of changes in credit policies or customer payment behaviors.
- Net Sales
-
After a period of relative stability from 2019 into early 2020, net sales experienced a downturn in the first quarter of 2020 but recovered thereafter. A significant acceleration in sales growth is observed beginning in early 2022, with the highest values recorded in late 2022 and early 2023, exceeding prior levels by a wide margin.
- Trade Accounts Receivable
-
Receivables decreased slightly during 2020 following a decline in sales but resumed an upward trend thereafter. From mid-2021 onwards, accounts receivable increased markedly, aligning with the surge in sales, which emphasizes the need for careful credit and collections management.
- Receivables Turnover
-
The turnover ratio peaked around early 2020, reflecting efficient collection during this period. Following this, the ratio declined particularly in the middle of 2022, indicating slower collections or extended credit terms at that time. A rebound in turnover is observed in the most recent quarter, implying improved collection efficiency.
In summary, the company has experienced substantial growth in net sales in recent periods, accompanied by a rise in accounts receivable. While receivables turnover has fluctuated, recent data suggests improvement in collection practices after a mid-period slowdown. Monitoring this dynamic will be essential to maintain liquidity and optimize working capital as sales continue to expand.
Payables Turnover
Albemarle Corp., payables turnover calculation (quarterly data)
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||
| Cost of goods sold | 1,303,712) | 1,619,659) | 1,047,991) | 899,169) | 678,698) | 657,610) | 581,293) | 525,479) | 565,604) | 613,727) | 492,812) | 530,690) | 496,827) | 654,053) | 569,880) | 559,138) | 548,578) | ||||||
| Accounts payable | 2,771,076) | 2,052,001) | 1,651,866) | 1,091,583) | 845,710) | 647,986) | 545,922) | 535,153) | 492,532) | 483,221) | 465,644) | 523,160) | 573,075) | 574,138) | 527,052) | 558,839) | 482,433) | ||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Payables turnover1 | 1.76 | 2.07 | 1.99 | 2.58 | 2.89 | 3.60 | 4.19 | 4.11 | 4.47 | 4.42 | 4.67 | 4.30 | 3.98 | 4.06 | 4.32 | 3.95 | 4.54 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Payables Turnover, Competitors2 | |||||||||||||||||||||||
| Linde plc | 6.49 | 6.49 | 6.50 | 5.66 | 5.40 | 5.01 | 5.44 | 5.14 | 5.30 | — | — | — | — | — | — | — | — | ||||||
| Sherwin-Williams Co. | 5.13 | 5.26 | 4.53 | 4.10 | 4.13 | 4.74 | 4.07 | 4.21 | 4.50 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Payables turnover
= (Cost of goods soldQ1 2023
+ Cost of goods soldQ4 2022
+ Cost of goods soldQ3 2022
+ Cost of goods soldQ2 2022)
÷ Accounts payable
= (1,303,712 + 1,619,659 + 1,047,991 + 899,169)
÷ 2,771,076 = 1.76
2 Click competitor name to see calculations.
Examination of the quarterly financial data reveals several notable trends in the company's cost of goods sold (COGS), accounts payable, and payables turnover ratios over the observed periods.
- Cost of Goods Sold (COGS)
- The COGS exhibited moderate fluctuations from early 2019 through 2020, with quarterly values generally ranging between approximately $490 million and $655 million. Starting in 2021, COGS began a marked upward trajectory, increasing steadily quarter over quarter. Notably, from mid-2021 onward, the figures escalated sharply, reaching a peak exceeding $1.6 billion by the fourth quarter of 2022, before slightly declining in the first quarter of 2023.
- Accounts Payable
- Accounts payable generally mirrored the upward trend observed in COGS but with some differences in timing and magnitude. Initially fluctuating within the $480 million to $575 million range during 2019 and 2020, accounts payable increased significantly from early 2021 onwards. By the end of 2022 and into early 2023, accounts payable expanded substantially, surpassing $2.7 billion in the first quarter of 2023. This rapid growth indicates an increasing volume of outstanding obligations and suggests extended credit terms or accumulation of liabilities.
- Payables Turnover Ratio
- The payables turnover ratio showed a generally declining trend over the entire period. Early quarters averaged around 4.0 to 4.5, indicating that payables were being settled approximately four to five times annually. However, from 2021 forward, the ratio dropped significantly, reaching the lowest levels near 1.7 to 2.1 in late 2022 and early 2023. This decline suggests the company is taking longer to pay its suppliers, implying either stretched payment terms or potential liquidity management strategies.
In summary, the company experienced substantial growth in both cost of goods sold and accounts payable from 2021 through early 2023, accompanied by a notable decline in payables turnover. The increasing COGS and accounts payable suggest expanded operations or higher input costs, while the decreasing turnover ratio indicates lengthening payment periods. These dynamics reflect evolving operational and financial management practices, potentially influenced by market conditions, supply chain factors, or strategic financial policies implemented during the period.
Working Capital Turnover
Albemarle Corp., working capital turnover calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||
| Current assets | 6,657,575) | 5,186,917) | 4,296,971) | 3,350,104) | 2,336,483) | 2,007,981) | 2,078,106) | 2,151,354) | 2,009,394) | 2,206,184) | 2,227,012) | 2,292,409) | 2,155,181) | 2,225,109) | 1,969,752) | 2,036,637) | 1,987,176) | ||||||
| Less: Current liabilities | 3,505,369) | 2,741,015) | 2,487,951) | 1,781,762) | 2,103,338) | 1,874,335) | 1,591,042) | 984,928) | 953,256) | 1,801,849) | 1,612,739) | 1,420,803) | 1,192,926) | 1,408,996) | 1,421,243) | 1,399,981) | 1,278,191) | ||||||
| Working capital | 3,152,206) | 2,445,902) | 1,809,020) | 1,568,342) | 233,145) | 133,646) | 487,064) | 1,166,426) | 1,056,138) | 404,335) | 614,273) | 871,606) | 962,255) | 816,113) | 548,509) | 636,656) | 708,985) | ||||||
| Net sales | 2,580,252) | 2,620,978) | 2,091,805) | 1,479,593) | 1,127,728) | 894,204) | 830,566) | 773,896) | 829,291) | 879,147) | 746,868) | 764,049) | 738,845) | 992,564) | 879,747) | 885,052) | 832,064) | ||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Working capital turnover1 | 2.78 | 2.99 | 3.09 | 2.76 | 15.55 | 24.90 | 6.80 | 2.77 | 3.05 | 7.74 | 5.28 | 3.87 | 3.63 | 4.40 | 6.41 | 5.37 | 4.77 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||||||||||||
| Linde plc | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Sherwin-Williams Co. | — | — | 1,022.67 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Working capital turnover
= (Net salesQ1 2023
+ Net salesQ4 2022
+ Net salesQ3 2022
+ Net salesQ2 2022)
÷ Working capital
= (2,580,252 + 2,620,978 + 2,091,805 + 1,479,593)
÷ 3,152,206 = 2.78
2 Click competitor name to see calculations.
- Working Capital
- The working capital demonstrates notable fluctuations over the analyzed quarters. Starting from approximately 709 million USD at the end of Q1 2019, it experienced a gradual decline reaching a low point of around 133 million USD by the end of Q4 2021. Subsequently, a strong recovery phase occurred through 2022 and into Q1 2023, where working capital rose sharply, hitting over 3.1 billion USD by March 31, 2023. This spike represents a significant increase in liquidity or short-term asset resources relative to current liabilities.
- Net Sales
- Net sales showed a degree of volatility with an initial peak near 993 million USD in Q4 2019, followed by a decline in 2020, likely influenced by broader market conditions. From mid-2021 onwards, net sales began a robust upward trend, surging to their highest levels exceeding 2.6 billion USD by the first quarter of 2023. This indicates a strong revenue growth trajectory, suggesting improved sales performance and potentially increased market demand or pricing power during this period.
- Working Capital Turnover
- Working capital turnover exhibits considerable variability, reflecting changes in both working capital and sales volume. Initially, turnover ratios hovered around the mid-single digits, fluctuating modestly through 2019 and 2020. However, a marked spike to 24.9 times occurred in Q4 2021, coinciding with the sharp dip in working capital and sustained sales levels. Following this peak, turnover sharply declined to more moderate values between 2.7 and 3.1 times by Q1 2023. This pattern suggests a period where sales were generated efficiently relative to the low level of working capital, followed by a normalization as working capital levels increased substantially. The general decline in turnover ratio towards the end of the period indicates that working capital grew at a faster pace than sales.
Average Inventory Processing Period
Albemarle Corp., average inventory processing period calculation (quarterly data)
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||
| Inventory turnover | 1.53 | 2.05 | 2.03 | 2.32 | 2.41 | 2.87 | 3.07 | 3.00 | 3.21 | 2.84 | 2.63 | 2.64 | 2.67 | 3.03 | 2.84 | 2.71 | 2.90 | ||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||
| Average inventory processing period1 | 238 | 178 | 179 | 158 | 151 | 127 | 119 | 122 | 114 | 128 | 139 | 138 | 137 | 120 | 129 | 135 | 126 | ||||||
| Benchmarks (no. days) | |||||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | |||||||||||||||||||||||
| Linde plc | 39 | 37 | 34 | 34 | 35 | 36 | 37 | 38 | 40 | — | — | — | — | — | — | — | — | ||||||
| Sherwin-Williams Co. | 77 | 75 | 73 | 72 | 72 | 62 | 61 | 62 | 68 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 1.53 = 238
2 Click competitor name to see calculations.
The analysis of the inventory metrics over the specified periods reveals notable trends in the company's inventory management efficiency.
- Inventory Turnover
- The inventory turnover ratio generally fluctuated across the quarters, starting at 2.9 in the first quarter of 2019 and displaying some volatility throughout the years. After a decline in 2020 reaching lows around 2.63-2.64, the ratio peaked again during 2021, with a high of 3.21 in the first quarter, indicating improved efficiency in inventory turnover. However, from 2022 onwards, there was a clear downward trend, culminating in a significant drop to 1.53 by the first quarter of 2023. This decline suggests a slowing movement of inventory, potentially indicative of overstocking or reduced sales velocity in recent quarters.
- Average Inventory Processing Period
- Consistent with the inventory turnover ratio, the average inventory processing period exhibited an inverse pattern. It started at 126 days in early 2019, experiencing an increase reaching around 138-139 days by late 2019 and mid-2020, then improved somewhat in 2021 with a decrease to as low as 114 days. Beginning in 2022, the processing period extended sharply, moving from 151 days up to an extended 238 days by the first quarter of 2023. This lengthening of processing cycle time signals a slower rate of inventory clearance, which aligns with the reduction in the turnover ratio, thus highlighting a deterioration in inventory management efficiency over the recent years.
Overall, the data points to an initial period of fluctuating but generally stable inventory management, followed by a marked decline in efficiency starting from 2022. The significant drop in turnover ratio coupled with the lengthening inventory processing period could imply challenges related to demand, supply chain disruptions, or inventory control strategies, warranting further investigation to identify underlying causes and potential corrective measures.
Average Receivable Collection Period
Albemarle Corp., average receivable collection period calculation (quarterly data)
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||
| Receivables turnover | 6.49 | 6.15 | 5.40 | 4.50 | 5.51 | 5.98 | 6.36 | 7.09 | 6.04 | 5.89 | 6.28 | 6.52 | 6.74 | 5.86 | 5.52 | 5.47 | 5.61 | ||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||
| Average receivable collection period1 | 56 | 59 | 68 | 81 | 66 | 61 | 57 | 51 | 60 | 62 | 58 | 56 | 54 | 62 | 66 | 67 | 65 | ||||||
| Benchmarks (no. days) | |||||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||||
| Linde plc | 52 | 50 | 50 | 54 | 56 | 53 | 54 | 55 | 54 | — | — | — | — | — | — | — | — | ||||||
| Sherwin-Williams Co. | 47 | 42 | 49 | 52 | 50 | 43 | 48 | 48 | 47 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 6.49 = 56
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio demonstrated a variable trend over the periods analyzed. Starting at 5.61 in the first quarter of 2019, it showed a modest decline through mid-2019, reaching a low of 5.47 before rebounding to 5.86 by the end of the year. In 2020, the ratio increased notably, peaking at 6.74 in the first quarter, but then gradually declined through the remainder of the year, ending at 5.89 in the last quarter. The year 2021 saw an upward movement in the turnover ratio, peaking at 7.09 in the second quarter, indicating improved efficiency in receivables management during that period. However, this was followed by a decrease in the latter half of 2021 and into early 2022, with the ratio descending to 5.51. In the subsequent quarters of 2022 and the first quarter of 2023, the ratio initially declined to 4.5 but then improved steadily, reaching 6.49 by March 2023. These fluctuations suggest varying collection effectiveness across the quarters, with periods of both improved and reduced receivables turnover.
- Average Receivable Collection Period
- The average receivable collection period, expressed in days, inversely mirrored the receivables turnover ratio, as expected. It began at 65 days in the first quarter of 2019, slightly increasing to 67 days mid-year, before decreasing to 62 days by the end of 2019. In 2020, the collection period shortened markedly to a low of 54 days in the first quarter, then gradually extended to 62 days by year-end. Throughout 2021, the collection period generally decreased, reaching the shortest duration of 51 days in the second quarter, indicating faster collection processes. Subsequently, the period lengthened again in 2022, reaching a peak of 81 days in the second quarter, representing slower collections. The most recent data into early 2023 indicates a trend towards improvement, with the collection period reducing to 56 days by the end of the first quarter. These variations reflect fluctuating payment behaviours or credit management policies impacting the time required to collect receivables.
- Overall Analysis
- Over the entire time frame, the data reveals cyclical patterns in the management of receivables, characterized by periods of improved liquidity and collection efficiency interspersed with times of extended payment durations. The inverse relationship between the receivables turnover ratio and the average collection period remains consistent throughout the periods. The fluctuations suggest operational or market-driven factors influencing customer payment behaviours and credit terms. The improvement observed in early 2023, with a higher turnover ratio and shorter collection period, may indicate strengthening credit control or improved cash flow management.
Operating Cycle
Albemarle Corp., operating cycle calculation (quarterly data)
No. days
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||
| Average inventory processing period | 238 | 178 | 179 | 158 | 151 | 127 | 119 | 122 | 114 | 128 | 139 | 138 | 137 | 120 | 129 | 135 | 126 | ||||||
| Average receivable collection period | 56 | 59 | 68 | 81 | 66 | 61 | 57 | 51 | 60 | 62 | 58 | 56 | 54 | 62 | 66 | 67 | 65 | ||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Operating cycle1 | 294 | 237 | 247 | 239 | 217 | 188 | 176 | 173 | 174 | 190 | 197 | 194 | 191 | 182 | 195 | 202 | 191 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Operating Cycle, Competitors2 | |||||||||||||||||||||||
| Linde plc | 91 | 87 | 84 | 88 | 91 | 89 | 91 | 93 | 94 | — | — | — | — | — | — | — | — | ||||||
| Sherwin-Williams Co. | 124 | 117 | 122 | 124 | 122 | 105 | 109 | 110 | 115 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 238 + 56 = 294
2 Click competitor name to see calculations.
The financial data reveals significant fluctuations and notable trends in the company's inventory management, receivable collections, and overall operating cycle over the analyzed periods.
- Average Inventory Processing Period
- The average inventory processing period exhibited a generally increasing trend from early 2019 through the first quarter of 2023. Starting around 126 days in March 2019, the period showed modest fluctuations until late 2020, where it hovered near the 120 to 140-day range. Beginning in 2021, a clear upward trajectory became noticeable, culminating in a significant rise to 238 days by March 2023. This suggests a lengthening duration for inventory turnover, possibly indicating slower inventory movement or increased stock levels.
- Average Receivable Collection Period
- The receivable collection period showed a more variable pattern across the time frame. Initially, it declined from about 65 days in early 2019 to approximately 54 days in March 2020, indicating improved collections. Subsequently, the period stabilized around the mid-50s to low-60s days through 2021. However, a marked increase occurred in mid-2022, peaking at 81 days before receding to 56 days by March 2023. These fluctuations might reflect changing credit policies, customer payment behavior, or economic conditions affecting timely collections.
- Operating Cycle
- The operating cycle, which combines inventory processing and receivable collection periods, mirrored the broader trend seen in inventory processing. It stayed relatively steady in the 170 to 200-day range until early 2021, after which it began to rise sharply. By March 2023, the operating cycle had extended to 294 days, a substantial increase compared to previous years. This lengthening indicates the company takes considerably longer to convert resources into cash, highlighting potential operational inefficiencies or external challenges impacting cash conversion timing.
Overall, the lengthening inventory processing and operating cycle suggest increasing capital tied up in operations, while the fluctuations in receivable collections indicate periods of both improvement and deterioration in cash inflows. This combination could impact the company’s liquidity and working capital management, warranting focused attention on inventory turnover and credit management strategies.
Average Payables Payment Period
Albemarle Corp., average payables payment period calculation (quarterly data)
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||
| Payables turnover | 1.76 | 2.07 | 1.99 | 2.58 | 2.89 | 3.60 | 4.19 | 4.11 | 4.47 | 4.42 | 4.67 | 4.30 | 3.98 | 4.06 | 4.32 | 3.95 | 4.54 | ||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||
| Average payables payment period1 | 208 | 176 | 184 | 141 | 126 | 102 | 87 | 89 | 82 | 83 | 78 | 85 | 92 | 90 | 84 | 92 | 80 | ||||||
| Benchmarks (no. days) | |||||||||||||||||||||||
| Average Payables Payment Period, Competitors2 | |||||||||||||||||||||||
| Linde plc | 56 | 56 | 56 | 64 | 68 | 73 | 67 | 71 | 69 | — | — | — | — | — | — | — | — | ||||||
| Sherwin-Williams Co. | 71 | 69 | 81 | 89 | 88 | 77 | 90 | 87 | 81 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 1.76 = 208
2 Click competitor name to see calculations.
- Payables Turnover Ratio
- The payables turnover ratio exhibits a declining trend over the analyzed periods. Starting from a relatively high ratio near 4.54 in early 2019, the ratio remained somewhat stable with minor fluctuations until the end of 2020, generally oscillating between approximately 3.9 and 4.7. However, from 2021 onward, the ratio shows a consistent downward trajectory, dropping from around 4.47 in the first quarter of 2021 to as low as 1.76 by the first quarter of 2023. This decreasing payables turnover suggests a lengthening duration in settling payables or reduced frequency of supplier payments.
- Average Payables Payment Period
- The average payables payment period inversely mirrors the payables turnover ratio, increasing steadily throughout the observed timeframe. Initially situated between 80 and 92 days in 2019 and early 2020, the payment period began to extend more markedly starting in 2021. By the first quarter of 2021, it was around 82 days and then increased significantly over the subsequent quarters, reaching 208 days by March 2023. This substantial lengthening of the payment period reinforces the observation that the company is taking more time to pay its suppliers.
- Overall Insights
- There is a clear inverse relationship between the payables turnover ratio and the average payment period, consistent with typical financial behavior where lower turnover correlates with longer payment periods. The significant extension of the payment period over this timeframe may indicate changes in the company’s cash management strategy, potentially aimed at preserving liquidity or adjusting to broader economic conditions. However, this trend towards slower payment could also have implications for supplier relationships and credit terms. The stable payables turnover and payment period in the early years contrast with the sharp changes observed from 2021 onwards, suggesting a shift in operational or financial management policies during this latter period.
Cash Conversion Cycle
Albemarle Corp., cash conversion cycle calculation (quarterly data)
No. days
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||
| Average inventory processing period | 238 | 178 | 179 | 158 | 151 | 127 | 119 | 122 | 114 | 128 | 139 | 138 | 137 | 120 | 129 | 135 | 126 | ||||||
| Average receivable collection period | 56 | 59 | 68 | 81 | 66 | 61 | 57 | 51 | 60 | 62 | 58 | 56 | 54 | 62 | 66 | 67 | 65 | ||||||
| Average payables payment period | 208 | 176 | 184 | 141 | 126 | 102 | 87 | 89 | 82 | 83 | 78 | 85 | 92 | 90 | 84 | 92 | 80 | ||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Cash conversion cycle1 | 86 | 61 | 63 | 98 | 91 | 86 | 89 | 84 | 92 | 107 | 119 | 109 | 99 | 92 | 111 | 110 | 111 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Cash Conversion Cycle, Competitors2 | |||||||||||||||||||||||
| Linde plc | 35 | 31 | 28 | 24 | 23 | 16 | 24 | 22 | 25 | — | — | — | — | — | — | — | — | ||||||
| Sherwin-Williams Co. | 53 | 48 | 41 | 35 | 34 | 28 | 19 | 23 | 34 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 238 + 56 – 208 = 86
2 Click competitor name to see calculations.
- Inventory Processing Period
- The average inventory processing period initially fluctuated slightly between 2019 and early 2021, ranging from 114 to 139 days. Starting in early 2022, there was a notable upward trend, with the days increasing significantly from 151 to 238 by the first quarter of 2023. This indicates a lengthening time to turn over inventory, potentially reflecting slower inventory movement or increased stock levels.
- Receivable Collection Period
- The average receivable collection period generally showed a decreasing trend from about 65 days in 2019 to 56 days by the first quarter of 2023. There were minor fluctuations during this period, notably a spike to 81 days in mid-2022, but overall, the period shortened, suggesting improved efficiency in collecting receivables or stricter credit terms.
- Payables Payment Period
- The average payables payment period displayed a consistent upward trend over the analyzed timeframe. From around 80 days in early 2019, it increased substantially to over 200 days by the first quarter of 2023. This extension suggests the company may be taking longer to settle its payables, possibly to preserve cash flow or due to changes in supplier payment terms.
- Cash Conversion Cycle
- The cash conversion cycle showed variability but generally remained relatively stable between 2019 and 2022, fluctuating mostly between 61 and 111 days. Notably, the cycle somewhat shortened during 2022, reaching a low point around 61 days before rising again to 86 days in early 2023. This indicates periods of improved liquidity and operational efficiency, although the recent increase may warrant attention.
- Summary
- Overall, the data suggests that the period to process inventory has significantly lengthened, while the collection of receivables has generally improved. Meanwhile, the company has extended its payment period to suppliers markedly. The cash conversion cycle reflects these dynamics with some volatility but remains within a moderate range. These trends collectively imply strategic shifts in working capital management, likely balancing between inventory build-up and cash preservation strategies.