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.
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Short-term Activity Ratios (Summary)
Steel Dynamics Inc., short-term (operating) activity ratios (quarterly data)
Based on: 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), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
The analysis of the financial turnover and cycle ratios over the observed quarters reveals several notable trends and shifts in operational efficiency and liquidity management.
- Inventory Turnover
- The inventory turnover ratio maintained a relatively stable range from early 2018 through mid-2020, fluctuating mostly between 4.4 and 5.3. However, starting in the latter half of 2020, a downward trend is visible peaking with the lowest turnover rates around late 2021. This suggests a slowdown in inventory movement that slightly improved by late 2022, though it remained below earlier period levels. The increased average inventory processing period during this time supports this observation, indicating slower inventory turnover.
- Receivables Turnover
- Receivables turnover ratios display periodic volatility but generally fluctuated between 7.7 and 12.4. Stronger turnover was evident in 2018 and 2019, with ratios mostly above 10, reflecting efficient collection practices. A decline occurred starting in early 2021 through 2022, coinciding with an increase in the average receivable collection period, which increased to more than 40 days during some quarters, indicating slower collection of receivables.
- Payables Turnover
- Payables turnover demonstrated significant variability. High turnover ratios in 2018 and 2019 (above 16) shifted downward notably beginning in 2020, with the lowest turnover ratios observed in 2021, pointing to extended payment periods to suppliers. Correspondingly, the average payables payment period lengthened from approximately 20 days in 2019 to over 47 days in early 2021 before gradually decreasing again in 2022, demonstrating changes in payment policies or cash management strategies.
- Working Capital Turnover
- The working capital turnover ratio exhibited moderate fluctuations, generally trending around 3.2 to 4.0. After a slight decline peaking in early 2020, the ratio improved to nearly 4.0 by 2022, indicating relatively stable efficiency in utilizing working capital over time.
- Operating Cycle
- The operating cycle extended significantly from about 98 days in late 2019 to a peak of 139 days in early 2021, driven primarily by slower inventory turnover and longer receivable collection periods. By late 2022, the operating cycle shortened closer to early 2020 levels, suggesting improvements in inventory and receivables management.
- Cash Conversion Cycle
- The cash conversion cycle mirrored the operating cycle trend, with a lower duration (~77 days) around late 2019, increasing to over 100 days in 2021, indicating extended time between cash outflows and inflows. An improvement is observed by late 2022 with the cycle reducing to 88 days, though still higher than pre-pandemic levels.
Overall, the data reflect a period of operational tightening and recovery. The company faced increased cash-to-cash cycle durations and slower turnover in inventory and receivables during the pandemic and associated economic disruptions, but signs of recovery are evident toward the end of the observed period. Payables management also adjusted accordingly, with a temporary delay in payments that helped mitigate cash flow pressures.
Turnover Ratios
Average No. Days
Inventory Turnover
Steel Dynamics Inc., inventory turnover calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Costs of goods sold | |||||||||||||||||||||||||
| Inventories | |||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||
| Inventory turnover1 | |||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||
| Inventory Turnover, Competitors2 | |||||||||||||||||||||||||
| Freeport-McMoRan Inc. | |||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Inventory turnover
= (Costs of goods soldQ3 2022
+ Costs of goods soldQ2 2022
+ Costs of goods soldQ1 2022
+ Costs of goods soldQ4 2021)
÷ Inventories
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The data reveals several notable trends in the company's operational efficiency and inventory management over the observed periods.
- Costs of Goods Sold (COGS)
- The COGS figures demonstrate a fluctuating yet overall upward trend. From March 2018 to December 2019, the costs display some variability but generally remain within a range of approximately 2.03 billion to 2.54 billion US dollars. Starting in 2020, there is an increase observed with some quarterly dips, particularly noticeable in mid-2020. Post-2020, a significant rise is observed through to September 2022, reaching over 4.3 billion US dollars at its peak, indicating increasing production costs or sales volume over time.
- Inventories
- Inventories follow a largely rising trend over the same period. The inventory levels increased steadily from around 1.6 billion US dollars in early 2018 to over 3.5 billion by mid-2022, with a notable surge starting from early 2021. This rise suggests that the company has been accumulating stock, possibly anticipating higher demand or facing slower turnover. The spike in inventories during 2021 and 2022 aligns with increases in COGS, which may indicate expanding operations or challenges in inventory management.
- Inventory Turnover Ratio
- The inventory turnover ratio exhibits a downward trend from about 5.13 times in March 2018 to a low near 3.69 times in December 2021, before partially recovering to approximately 4.7 times by September 2022. This pattern suggests that the company’s efficiency in converting inventory into sales slowed during this period, reaching its lowest point at the end of 2021. The subsequent partial improvement in turnover ratio toward late 2022 may reflect efforts to enhance inventory management or changes in sales dynamics.
In summary, the data indicates that while costs of goods sold and inventory levels have substantially increased, the efficiency of inventory use, as measured by turnover ratio, declined before showing some recovery. This mixed pattern suggests the company experienced growing operational activity but faced challenges in maintaining inventory efficiency, particularly around 2021, with some improvements evident in 2022.
Receivables Turnover
Steel Dynamics Inc., receivables turnover calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Net sales | |||||||||||||||||||||||||
| Accounts receivable, net | |||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||
| Receivables turnover1 | |||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||||||||||||||
| Freeport-McMoRan Inc. | |||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Receivables turnover
= (Net salesQ3 2022
+ Net salesQ2 2022
+ Net salesQ1 2022
+ Net salesQ4 2021)
÷ Accounts receivable, net
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The quarterly financial data reveals several notable trends in the company's performance over the observed periods. Net sales have exhibited significant fluctuations with a general upward tendency particularly starting in early 2021. Initial quarters in 2018 show moderate sales figures with a peak in the third quarter of 2018, followed by a decline through the end of 2019. Thereafter, after a drop in mid-2020, net sales increased substantially from early 2021 to mid-2022, reaching the highest recorded value in the second quarter of 2022. However, a slight regression is observed in the third quarter of 2022.
The net accounts receivable followed a broadly similar pattern, with increases corresponding to the rise in net sales. Accounts receivable peaked notably in the fourth quarter of 2021 and continued to rise until mid-2022, coinciding with the highest sales periods. There is, however, a slight dip in accounts receivable in the third quarter of 2022, mirroring the decrease in net sales during the same quarter.
Receivables turnover ratio, which measures how efficiently the company collects its receivables, displays considerable variation over the time frame. The ratio was relatively high in 2018 and 2019, indicating efficient collection during those years. There was a noticeable decline starting early 2021, hitting a low in the first quarter of 2021. Some recovery is observed towards late 2021 and into 2022, but ratios remain below the levels seen in earlier years. This suggests that while revenues and receivables increased, collection efficiency decreased during the periods of high sales volume.
- Net Sales
- Fluctuated initially with a decline at the end of 2019, dropped in mid-2020, then sharply increased from early 2021 to mid-2022, peaking in Q2 2022 before a slight drop in Q3 2022.
- Accounts Receivable, Net
- Correlated with net sales trends, rising steadily through 2021 and 2022, peaking in mid-2022 followed by a minor decline in the most recent quarter.
- Receivables Turnover
- Higher efficiency noted in 2018 and 2019, declining through early 2021, with partial recovery in late 2021 and 2022 but remaining below earlier period levels, indicating reduced collection efficiency during peak sales periods.
In summary, the data indicates a period of rapid sales growth from early 2021 onwards, accompanied by increasing accounts receivable balances. This growth phase, however, appears to be accompanied by a weakening in the efficiency of receivables collection, which may warrant close monitoring to optimize working capital management going forward.
Payables Turnover
Steel Dynamics Inc., payables turnover calculation (quarterly data)
Based on: 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), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Payables turnover
= (Costs of goods soldQ3 2022
+ Costs of goods soldQ2 2022
+ Costs of goods soldQ1 2022
+ Costs of goods soldQ4 2021)
÷ Accounts payable
= ( + + + )
÷ =
The analysis of the quarterly financial metrics reveals several notable trends in the company's cost management and supplier payment efficiency over the observed periods.
- Costs of Goods Sold (COGS)
- The COGS demonstrated an overall upward trajectory from March 2018 through September 2022. Initially, the quarterly values fluctuated moderately around the 2.1 to 2.5 billion US dollars mark in 2018. A slight decline was observed towards late 2019 and mid-2020, coinciding with external market disruptions. Starting from early 2021, COGS increased significantly, reaching peaks above 4.3 billion US dollars in mid-2022 before a minor decrease in the last reported quarter. This pattern indicates an overall growth in production or sales volume, or potential inflationary pressure on input costs during the latter periods.
- Accounts Payable
- Accounts payable showed a correlated rise with COGS but with more pronounced fluctuations. From about 562 million in early 2018, the balance increased steadily, peaking above 1.28 billion by the end of 2021. Thereafter, the value slightly declined but remained above 1.1 billion through late 2022. The elevated levels in accounts payable suggest larger outstanding obligations to suppliers, possibly related to increased purchasing activities or modified payment terms with vendors.
- Payables Turnover Ratio
- The payables turnover ratio, representing how many times the company pays off its accounts payable during a period, showed a declining trend from an initial 14.58 times in early 2018 down to a low near 7.71 times by the first quarter of 2021. Thereafter, the ratio gradually recovered to about 13.61 by late 2022. The decreasing turnover ratio over several quarters implies a slowdown in payment velocity, potentially signaling extended payment terms or cash conservation efforts. The subsequent improvement indicates a return towards faster payment cycles or improved liquidity management later in the timeline.
In summary, the company's cost of goods sold and accounts payable values generally increased across these years, reflecting expanded operational scale or increased input costs. Meanwhile, the payables turnover ratio's initial decline followed by recovery suggests temporary adjustments in payment policies or cash flow management strategies. These findings may warrant further investigation into the underlying causes such as supply chain changes, market conditions, or strategic financial decisions affecting payables and cost structures.
Working Capital Turnover
Steel Dynamics Inc., working capital turnover calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Current assets | |||||||||||||||||||||||||
| Less: Current liabilities | |||||||||||||||||||||||||
| Working capital | |||||||||||||||||||||||||
| Net sales | |||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||
| Working capital turnover1 | |||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||||||||||||||
| Freeport-McMoRan Inc. | |||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Working capital turnover
= (Net salesQ3 2022
+ Net salesQ2 2022
+ Net salesQ1 2022
+ Net salesQ4 2021)
÷ Working capital
= ( + + + )
÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital shows an overall increasing trend throughout the covered periods. Starting from approximately 2.79 billion USD in March 2018, it experiences some fluctuations but generally rises, reaching about 5.68 billion USD by September 2022. Notably, there is significant growth during 2021 and 2022, with a pronounced increase from around 3.24 billion USD at the end of 2019 to over 5.68 billion USD by the third quarter of 2022.
- Net Sales
- Net sales exhibit considerable volatility across the periods. Initially, net sales increase till September 2018, peaking near 3.22 billion USD, then gradually decline through 2019. There is a marked drop in the mid-2020 period, coinciding with global economic challenges, with sales falling as low as approximately 2.09 billion USD in June 2020. Following this downturn, net sales show a strong recovery and upward trajectory beginning in early 2021, reaching a peak of about 6.21 billion USD in mid-2022 before a slight decrease in the most recent quarter.
- Working Capital Turnover
- The working capital turnover ratio reflects the efficiency of using working capital to generate sales. The ratio fluctuates between roughly 3.2 and 4.0 over the analyzed timeframe. It peaks around 3.98 in March 2019, then declines towards the end of 2019 and early 2020, reaching lows around 3.2. From early 2021 onwards, the ratio recovers and stabilizes around 4.0, indicating improved efficiency in the utilization of working capital despite the growing absolute amount of working capital.
- Summary Insights
- The data suggests that while working capital has significantly increased, the company maintains relatively stable efficiency in converting working capital into sales. The spike in working capital during 2021 and 2022 aligns with a robust recovery and growth phase in net sales after a period of decline, likely affected by external economic conditions around 2020. The ability to sustain a working capital turnover close to or above historical levels during this growth phase indicates effective management of operational liquidity alongside expanding sales volumes.
Average Inventory Processing Period
Steel Dynamics Inc., average inventory processing period calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||
| Inventory turnover | |||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||
| Average inventory processing period1 | |||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | |||||||||||||||||||||||||
| Freeport-McMoRan Inc. | |||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Inventory Turnover Trend
- The inventory turnover ratio exhibited relative stability with minor fluctuations from March 2018 through December 2019, maintaining levels generally between 4.8 and 5.4. A notable decline began in early 2020, reaching a low point in December 2020 at 4.43, indicating a slowing in the frequency of inventory cycles. Subsequently, there was a gradual recovery observed from the first quarter of 2021, with the ratio improving to 4.7 by September 2022, although it remained below earlier peak levels.
- Average Inventory Processing Period Trend
- The average inventory processing period, measured in days, mirrored the inverse movement of inventory turnover. It remained fairly steady around the low 70s during 2018 and 2019. However, there was a prolongation in processing times starting in 2020, peaking at 99 days in December 2021. Following this peak, a reduction trend emerged, with the period shortening to 78 days by September 2022, signaling some improvement in inventory management efficiency.
- Overall Observations and Insights
- The data indicates that inventory management was relatively efficient through 2018 and 2019, with turnover consistently above 5 and processing periods around 70 days. The disruption beginning in 2020 suggests challenges in inventory movement, resulting in slower turnover and longer holding periods, possibly linked to external market or operational factors. The partial recovery in turnover ratios and corresponding decrease in processing days through 2021 and 2022 suggest adjusted or improved inventory practices, though performance had not yet reached pre-2020 benchmarks by the end of the period examined.
Average Receivable Collection Period
Steel Dynamics Inc., average receivable collection period calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||
| Receivables turnover | |||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||
| Average receivable collection period1 | |||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||||||
| Freeport-McMoRan Inc. | |||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio exhibited fluctuations throughout the analyzed periods. Initially, the ratio hovered around 9.9 to 9.16 in 2018, with a notable increase to 11.33 by the end of that year, indicating improved efficiency in collecting receivables during that quarter. The upward trend continued into 2019, peaking at 12.39 in the last quarter, signaling stronger credit management. However, this was followed by volatility in 2020, where the ratio decreased to around 9.88 by year-end, possibly reflecting challenges in collection efficiency. In 2021, the turnover ratio declined further, reaching a low near 7.74 in the first quarter, before gradually recovering to 9.61 by the end of the year. The early 2022 figures show a modest decline, with the ratio ranging between 8.34 and 9.75, indicating some instability but overall more moderate collection efficiency compared to the peak in 2019.
- Average Receivable Collection Period
- The average receivable collection period generally moves inversely to the receivables turnover ratio, as expected. In 2018, collection days decreased from 37 to a low of 32 days by the end of the year, reinforcing the impression of improved receivables management. This trend was sustained into 2019, with collection days dropping further to 29 days in the last quarter, reflecting faster customer payments. The period 2020 brought an increase in collection days, rising back to 37 days by year-end, indicating slower collections, which aligns with the reduced turnover ratio observed. The average collection period increased significantly in the first half of 2021, peaking at 47 days, consistent with the drop in turnover ratio, suggesting collection challenges during that time. Although there was some improvement by the end of 2021, collection days remained elevated compared to earlier periods. In 2022, the data shows fluctuating collection days between 37 and 44 days, highlighting ongoing variability in the receivables collection process.
- Overall Analysis
- The reported data points to a cyclical pattern in the management of receivables over the observed timeframe. The company demonstrated strong receivables effectiveness in 2019, achieving the highest turnover ratio and shortest collection periods. However, the subsequent years indicate a deterioration in receivables performance, with longer collection periods and lower turnover ratios, particularly pronounced in early 2021. While some recovery occurred towards the end of 2021 and into 2022, the metrics remain less favorable compared to peak levels. The fluctuations suggest potential external factors impacting customer payment behavior or internal operational issues in credit management during these periods.
Operating Cycle
Steel Dynamics Inc., operating cycle calculation (quarterly data)
No. days
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||
| Average inventory processing period | |||||||||||||||||||||||||
| Average receivable collection period | |||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||
| Operating cycle1 | |||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||
| Operating Cycle, Competitors2 | |||||||||||||||||||||||||
| Freeport-McMoRan Inc. | |||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
- Inventory Processing Period
- The average inventory processing period exhibited a general upward trend over the analyzed timeframe. Starting at 71 days in the first quarter of 2018, it shows some fluctuations but mostly rises, reaching a peak of 99 days in the final quarter of 2021 before slightly declining to 78 days by the third quarter of 2022. This indicates a lengthening period for inventory turnover particularly evident during 2020 and 2021.
- Receivable Collection Period
- The average receivable collection period varied moderately throughout the periods. Beginning at 37 days in early 2018, it experienced minor fluctuations, with lows near 29 days and highs around 47 days. The period tends to increase notably during 2021, peaking at 47 days, followed by a modest decline to 37 days by the third quarter of 2022. This suggests some variability but generally a stable collection duration with a temporary elongation in 2021.
- Operating Cycle
- The operating cycle shows an overall increasing trend, beginning at 108 days in the first quarter of 2018 and moving upwards to a high of 139 days in the first quarter of 2021. After this peak, it exhibits a slight downward adjustment to 115 days by the third quarter of 2022. The lengthening of the operating cycle aligns with the trends observed in inventory processing and receivable collection periods, indicating an overall increase in time to convert inventory and receivables into cash, particularly during 2020 and 2021.
Average Payables Payment Period
Steel Dynamics Inc., average payables payment period calculation (quarterly data)
Based on: 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), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
- Payables Turnover
- The payables turnover ratio exhibited notable fluctuations over the assessed periods. From early 2018 through the end of 2019, the ratio generally trended upward, peaking around late 2018 and maintaining relatively high levels throughout 2019. This indicates a faster rate of paying off suppliers during that interval. However, starting in early 2020, the ratio decreased considerably, reaching its lowest point in late 2020, which reflects a slower turnover of payables and possibly extended payment cycles. From 2021 onward, the ratio showed a recovery trend, gradually increasing into 2022, nearing values observed prior to the decline, suggestive of improved payment efficiency or changes in supplier terms.
- Average Payables Payment Period
- The average payment period closely mirrored the inverse behavior of the payables turnover ratio, as expected. During 2018 and 2019, the payment period remained relatively short and stable, typically around 20 to 25 days, signifying prompt settlement of obligations. The period then notably lengthened starting in 2020, peaking at 47 days in early 2021, which aligns with the observed dip in turnover ratio and implies delayed payments to suppliers. Following this peak, the payment period gradually shortened again through 2021 and 2022, decreasing back toward the 30-day range, indicating a return to more timely payments.
- Overall Insights
- The data shows a cyclical pattern with a clear disruption around 2020, possibly influenced by external factors affecting liquidity or operational efficiency. The initial years reveal strong and consistent payment practices, interrupted by a period of slower payments and extended credit terms. The recovery phase beginning in 2021 suggests adjustments in working capital management or improved cash flow conditions. These trends provide valuable insights into the company's short-term liquidity dynamics and supplier relationships over the reported timeframe.
Cash Conversion Cycle
Steel Dynamics Inc., cash conversion cycle calculation (quarterly data)
No. days
Based on: 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), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
- Inventory Processing Period
- The average inventory processing period displays a generally increasing trend over the analyzed timeframe. Starting at 71 days in the first quarter of 2018, it rose steadily with some fluctuations, reaching a peak of 99 days by the fourth quarter of 2021 before slightly declining to 78 days in the third quarter of 2022. This suggests that the company experienced elongation in the time taken to process inventory, which could indicate challenges in inventory management efficiency or changes in inventory composition.
- Receivable Collection Period
- The average receivable collection period fluctuated moderately during the period. Beginning at 37 days in early 2018, it saw minor ups and downs but generally remained within the range of 29 to 47 days. Notably, there was an increase to 47 days in the first quarter of 2021, followed by a gradual decrease to 37 days by the third quarter of 2022. This pattern might reflect variations in customer payment behavior or adjustments in credit policy enforcement.
- Payables Payment Period
- The average payables payment period exhibited an upward trend across the observed periods, notably increasing from 25 days in the first quarter of 2018 to a peak of 47 days in the first quarter of 2021. After reaching this peak, the period decreased steadily, ending at 27 days by the third quarter of 2022. This suggests that the company initially extended its payment terms or delayed payments to suppliers but later reverted to shorter payment cycles, possibly improving supplier relations or responding to changes in cash flow management.
- Cash Conversion Cycle
- The cash conversion cycle (CCC) showed variability with a fluctuating upward trend until the end of 2021, moving from 83 days in early 2018 to a high of 102 days in the first quarter of 2022. It then decreased somewhat to 88 days in the third quarter of 2022. The increase reflects a lengthening in the time from cash outlay to cash receipt, influenced by the increases in inventory processing and receivable collection periods. The subsequent decrease may indicate efforts to optimize working capital management towards the latter part of the timeline.