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.
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- Statement of Comprehensive Income
- Common-Size Income Statement
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
- Aggregate Accruals
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Short-term Activity Ratios (Summary)
Air Products & Chemicals Inc., short-term (operating) activity ratios
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
- Inventory Turnover
- The inventory turnover ratio demonstrated a notable increase from 10.56 in 2015 to a peak of 17.15 in 2017, indicating improved efficiency in managing inventory during this period. However, it gradually declined thereafter to 14.47 by 2020, suggesting a moderate reduction in inventory management efficiency in the more recent years.
- Receivables Turnover
- The receivables turnover ratio remained relatively stable over the periods, with slight fluctuations around the mid-to-high sixes and low sevens. It started at 7.04 in 2015, dipped to 6.61 in 2016, and ended at 6.95 in 2020, indicating consistent but modest variation in the speed of collecting receivables.
- Payables Turnover
- Payables turnover showed considerable volatility. It declined from 10.87 in 2015 to 6.69 in 2018, reflecting slower payments to suppliers. Subsequently, it increased significantly to 11.31 in 2019, before slightly decreasing to 10.73 in 2020. This suggests shifts in payment policies or cash management strategies across the years.
- Working Capital Turnover
- Working capital turnover data is partially missing but indicates significant variability. It was 9.21 in 2016, dropped sharply to 2.42 in 2017, marginally recovered to around 3.2 in 2018 and 2019, then declined again to 1.41 in 2020. This trend points to declining efficiency in using working capital to generate sales or overall decreased operational efficiency in this area.
- Average Inventory Processing Period
- The average inventory processing period decreased markedly from 35 days in 2015 and 2016 to 21 days in 2017, indicating faster inventory turnover at that time. Following this improvement, it slightly increased year-over-year to reach 25 days by 2020, suggesting a moderate slowdown in inventory processing in recent years.
- Average Receivable Collection Period
- This metric fluctuated narrowly around 50 to 55 days throughout the entire period. It was 52 days in 2015, increased to 55 days in 2016, and remained close to this range, ending at 53 days in 2020. This stability suggests consistent credit and collection policy execution over time.
- Operating Cycle
- The operating cycle shortened significantly from 87 days in 2015 to 72 days in 2018, reflecting improved overall operational efficiency. However, it then extended slightly to 78 days by 2020, indicating a moderate resurgence in the time required to convert raw materials into cash.
- Average Payables Payment Period
- The average payables payment period rose steadily from 34 days in 2015 to a high of 55 days in 2018, implying longer payment durations to suppliers. It then returned to levels close to the start period, with 32 days in 2019 and 34 days in 2020, reflecting a possible adjustment back to quicker payments or altered supplier terms.
- Cash Conversion Cycle
- The cash conversion cycle showed a notable improvement through 2018, dropping from 53 days in 2015 to 17 days in 2018, representing enhanced liquidity and working capital management. However, this trend reversed thereafter with the cycle increasing to 44 days in both 2019 and 2020, indicating a deterioration in cash flow timing and operational efficiency.
Turnover Ratios
Average No. Days
Inventory Turnover
Air Products & Chemicals Inc., inventory turnover calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Cost of sales | |||||||
| Inventories | |||||||
| Short-term Activity Ratio | |||||||
| Inventory turnover1 | |||||||
| Benchmarks | |||||||
| Inventory Turnover, Competitors2 | |||||||
| Linde plc | |||||||
| Sherwin-Williams Co. | |||||||
| Inventory Turnover, Sector | |||||||
| Chemicals | |||||||
| Inventory Turnover, Industry | |||||||
| Materials | |||||||
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Inventory turnover = Cost of sales ÷ Inventories
= ÷ =
2 Click competitor name to see calculations.
- Cost of Sales
- The cost of sales exhibited a consistent decline from 2015 to 2017, falling from 6,944,100 thousand USD in 2015 to 5,753,400 thousand USD in 2017. Subsequently, there was a slight increase in 2018 to 6,189,500 thousand USD, followed by decreases in the subsequent years reaching 5,858,100 thousand USD by 2020. The overall trend indicates a reduction in cost of sales over the six-year period, with minor fluctuations in between.
- Inventories
- Inventory levels demonstrated a downward trend from 2015 through 2017, decreasing substantially from 657,800 thousand USD to 335,400 thousand USD. After this significant drop, inventories generally stabilized, showing modest increases in 2018, 2019, and 2020, ending with 404,800 thousand USD. This pattern indicates initial inventory reduction followed by relative stabilization at lower levels compared to 2015.
- Inventory Turnover Ratio
- The inventory turnover ratio increased notably from 10.56 in 2015 to a peak of 17.15 in 2017, reflecting an improvement in how efficiently the company managed its inventory during that period. After 2017, the ratio slightly declined over the next three years to 14.47 in 2020. Despite this decrease, turnover remained significantly higher than the levels observed in 2015 and 2016, indicating sustained improved inventory management compared to the earlier years.
Receivables Turnover
Air Products & Chemicals Inc., receivables turnover calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Sales | |||||||
| Trade receivables, net | |||||||
| Short-term Activity Ratio | |||||||
| Receivables turnover1 | |||||||
| Benchmarks | |||||||
| Receivables Turnover, Competitors2 | |||||||
| Linde plc | |||||||
| Sherwin-Williams Co. | |||||||
| Receivables Turnover, Sector | |||||||
| Chemicals | |||||||
| Receivables Turnover, Industry | |||||||
| Materials | |||||||
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Receivables turnover = Sales ÷ Trade receivables, net
= ÷ =
2 Click competitor name to see calculations.
- Sales
- The sales figures exhibit a fluctuating trend over the six-year period. Sales initially declined from approximately $9.89 billion in 2015 to about $8.19 billion in 2017, representing a significant decrease. This downturn was followed by a partial recovery during 2018 and 2019, with sales reaching roughly $8.94 billion and $8.92 billion respectively. However, in 2020, sales experienced a slight decline again, falling to approximately $8.86 billion. Overall, sales do not demonstrate consistent growth and show volatility with a general downward tendency from the start of the period to the end.
- Trade Receivables, Net
- Trade receivables, net, show moderate variability but generally maintain a level between $1.17 billion and $1.44 billion. After an increase from about $1.41 billion in 2015 to approximately $1.44 billion in 2016, there was a decline to roughly $1.17 billion in 2017. Following this dip, trade receivables gradually increased again through 2018 to 2020, reaching about $1.27 billion. The trend suggests some fluctuations in credit sales or collection patterns but no extreme volatility.
- Receivables Turnover
- The receivables turnover ratio fluctuates within a narrow band around 7. The ratio decreased slightly from 7.04 in 2015 to 6.61 in 2016, indicating a slower collection of receivables. It then improved to 6.97 in 2017 and reached a peak of 7.40 in 2018, suggesting more efficient collection efforts during that year. Afterward, the ratio declined to 7.08 in 2019 and further to 6.95 in 2020. These changes imply some variability in the company's efficiency in collecting receivables, with the highest effectiveness shown in 2018.
Payables Turnover
Air Products & Chemicals Inc., payables turnover calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Cost of sales | |||||||
| Trade creditors | |||||||
| Short-term Activity Ratio | |||||||
| Payables turnover1 | |||||||
| Benchmarks | |||||||
| Payables Turnover, Competitors2 | |||||||
| Linde plc | |||||||
| Sherwin-Williams Co. | |||||||
| Payables Turnover, Sector | |||||||
| Chemicals | |||||||
| Payables Turnover, Industry | |||||||
| Materials | |||||||
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Payables turnover = Cost of sales ÷ Trade creditors
= ÷ =
2 Click competitor name to see calculations.
- Cost of Sales
- The cost of sales demonstrated a general downward trend from 2015 to 2020, decreasing from $6,944,100 thousand in 2015 to $5,858,100 thousand in 2020. There was a consistent decline up to 2017, followed by a slight increase in 2018, then again a decline in the subsequent years. This pattern suggests an overall reduction in production or procurement costs over the examined period, with a temporary increase in 2018 possibly indicating higher operational activity or rising input costs during that year.
- Trade Creditors
- Trade creditors values exhibited fluctuations across the years. Beginning at $638,900 thousand in 2015, the figure rose moderately in 2016 and 2018 to peaks of $676,100 thousand and $924,600 thousand respectively, but decreased notably in 2019 to $528,200 thousand, followed by a slight increase in 2020 to $546,200 thousand. The significant spike in 2018 suggests a build-up of payables, possibly due to extended credit terms or delayed payments, which reversed in 2019 suggesting improved payables management or reduced procurement needs.
- Payables Turnover Ratio
- The payables turnover ratio reveals overall volatility with a general decline from 10.87 in 2015 to 6.69 in 2018, followed by a sharp increase to 11.31 in 2019 and a slight decrease to 10.73 in 2020. A lower turnover ratio in 2018 indicates slower payment of trade creditors, consistent with the peak in trade creditors that year, while the increase in 2019 and 2020 reflects quicker payment cycles. These changes may point to shifts in working capital management strategies or cash flow priorities over the years.
Working Capital Turnover
Air Products & Chemicals Inc., working capital turnover calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current assets | |||||||
| Less: Current liabilities | |||||||
| Working capital | |||||||
| Sales | |||||||
| Short-term Activity Ratio | |||||||
| Working capital turnover1 | |||||||
| Benchmarks | |||||||
| Working Capital Turnover, Competitors2 | |||||||
| Linde plc | |||||||
| Sherwin-Williams Co. | |||||||
| Working Capital Turnover, Sector | |||||||
| Chemicals | |||||||
| Working Capital Turnover, Industry | |||||||
| Materials | |||||||
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Working capital turnover = Sales ÷ Working capital
= ÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital demonstrated a significant shift from a negative position in 2015, standing at -737,300 thousand US dollars, to a positive and increasing trend in subsequent years. By 2016, it had risen sharply to 1,034,000 thousand US dollars and continued growing to reach 6,268,200 thousand US dollars by 2020. This upward trajectory indicates an improvement in short-term financial health and liquidity, suggesting better management of current assets and liabilities over the period.
- Sales
- Sales figures fluctuated over the six-year span without a clear upward or downward trend. The highest recorded sales were in 2015 at 9,894,900 thousand US dollars, followed by a general decline reaching a low of 8,187,600 thousand US dollars in 2017. Thereafter, sales marginally recovered but remained below the initial 2015 peak, closing at 8,856,300 thousand US dollars in 2020. This pattern suggests variability in market demand or other operational factors affecting revenue generation.
- Working Capital Turnover Ratio
- The working capital turnover ratio, which relates sales to working capital, was not available in 2015 due to negative working capital. In 2016, the ratio was notably high at 9.21, indicative of efficient utilization of working capital relative to sales. However, this ratio decreased significantly in the following years, declining to 1.41 by 2020. The downward trend may reflect the substantial increase in working capital relative to sales, implying a less efficient conversion of working capital into revenue over time.
- Overall Analysis
- The data reveals a marked improvement in liquidity as evidenced by the growth in working capital, while sales experienced fluctuations without meaningful growth. The declining working capital turnover ratio suggests a shift towards holding more working capital per unit of sales, which could indicate a strategic decision to bolster financial stability or a potential inefficiency in asset utilization. These trends warrant further examination into the components of working capital and the factors influencing sales performance to fully understand the company's operational dynamics during this period.
Average Inventory Processing Period
Air Products & Chemicals Inc., average inventory processing period calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| Inventory turnover | |||||||
| Short-term Activity Ratio (no. days) | |||||||
| Average inventory processing period1 | |||||||
| Benchmarks (no. days) | |||||||
| Average Inventory Processing Period, Competitors2 | |||||||
| Linde plc | |||||||
| Sherwin-Williams Co. | |||||||
| Average Inventory Processing Period, Sector | |||||||
| Chemicals | |||||||
| Average Inventory Processing Period, Industry | |||||||
| Materials | |||||||
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Inventory Turnover Trend
- The inventory turnover ratio exhibited notable fluctuations over the six-year period. Initially, the ratio was relatively stable at 10.56 in 2015 and slightly decreased to 10.33 in 2016. Thereafter, there was a pronounced increase, peaking at 17.15 in 2017. This was followed by a gradual decline to 15.63 in 2018, then a slight decrease to 15.39 in 2019, and a further decline to 14.47 in 2020. Overall, while the turnover improved significantly from 2015 to 2017, there was a weakening trend in the subsequent years.
- Average Inventory Processing Period
- The average inventory processing period decreased sharply from 35 days in 2015 and 2016 to 21 days in 2017, indicating improved efficiency in inventory management. However, after 2017, the period began to increase steadily, rising to 23 days in 2018, 24 days in 2019, and 25 days in 2020. This reflects a lengthening of the time inventory is held, consistent with the observed decrease in the inventory turnover ratio in the later years.
- Relationship Between Inventory Turnover and Processing Period
- An inverse relationship is evident between inventory turnover and the average inventory processing period. The peak in inventory turnover in 2017 coincides with the lowest processing period, demonstrating efficient inventory usage during that year. Subsequently, as the processing period increased, there was a corresponding decline in the turnover ratio, which may suggest reduced inventory management effectiveness or changes in operational or market conditions affecting inventory movement.
Average Receivable Collection Period
Air Products & Chemicals Inc., average receivable collection period calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| Receivables turnover | |||||||
| Short-term Activity Ratio (no. days) | |||||||
| Average receivable collection period1 | |||||||
| Benchmarks (no. days) | |||||||
| Average Receivable Collection Period, Competitors2 | |||||||
| Linde plc | |||||||
| Sherwin-Williams Co. | |||||||
| Average Receivable Collection Period, Sector | |||||||
| Chemicals | |||||||
| Average Receivable Collection Period, Industry | |||||||
| Materials | |||||||
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio exhibited some fluctuations over the examined period. Starting at 7.04 in 2015, this ratio decreased to 6.61 in 2016, indicating a slight decline in the efficiency of collecting receivables. Subsequently, it rose to 6.97 in 2017 and further increased to a peak of 7.4 in 2018, reflecting improved collection performance in those years. However, the ratio then declined to 7.08 in 2019 and further to 6.95 in 2020. Overall, the trend shows intermittent improvements and declines, with the highest efficiency recorded in 2018 and a modest decrease thereafter.
- Average Receivable Collection Period
- The average receivable collection period, expressed in days, inversely mirrors the receivables turnover trend. It started at 52 days in 2015 and increased to 55 days in 2016, suggesting it took longer to collect receivables during that year. This period then shortened to 52 days in 2017 and decreased further to 49 days in 2018, indicating enhanced collection efficiency corresponding with the peak in turnover. In 2019 and 2020, the collection period lengthened again to 52 and 53 days respectively, implying a slight slowdown in receivables collection.
- Summary of Trends
- The data suggest variable efficiency in receivables management over the six-year period. Notably, 2018 represented the strongest year in terms of receivables turnover and the shortest collection period, denoting optimal collection processes. The years preceding and following showed variability, with slightly reduced efficiency in 2016 and in the final two years measured. Despite these fluctuations, the average receivable collection period remained relatively stable, generally ranging between 49 and 55 days.
Operating Cycle
Air Products & Chemicals Inc., operating cycle calculation, comparison to benchmarks
No. days
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| Average inventory processing period | |||||||
| Average receivable collection period | |||||||
| Short-term Activity Ratio | |||||||
| Operating cycle1 | |||||||
| Benchmarks | |||||||
| Operating Cycle, Competitors2 | |||||||
| Linde plc | |||||||
| Sherwin-Williams Co. | |||||||
| Operating Cycle, Sector | |||||||
| Chemicals | |||||||
| Operating Cycle, Industry | |||||||
| Materials | |||||||
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
- Average inventory processing period
- The average inventory processing period remained stable at 35 days for the first two years before a significant reduction to 21 days in 2017. Following this decrease, a gradual upward trend is observed, reaching 25 days by 2020. This indicates an initial improvement in inventory turnover efficiency, though some slight lengthening occurred in the most recent years.
- Average receivable collection period
- The average receivable collection period shows moderate fluctuations over the period. It increased slightly from 52 days in 2015 to 55 days in 2016, then declined to 49 days in 2018, indicating improved collection efficiency. However, it increased again to 52 and 53 days in the two subsequent years, suggesting some instability in collections.
- Operating cycle
- The operating cycle experienced a notable decline from 87 days in 2015 and 90 days in 2016 to 73 days in 2017 and 72 days in 2018, pointing to enhanced operational efficiency in processing inventory and collecting receivables. From 2018 onwards, a slight increase is evident, reaching 78 days in 2020, reflecting minor extensions in the overall cash conversion period.
Average Payables Payment Period
Air Products & Chemicals Inc., average payables payment period calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| Payables turnover | |||||||
| Short-term Activity Ratio (no. days) | |||||||
| Average payables payment period1 | |||||||
| Benchmarks (no. days) | |||||||
| Average Payables Payment Period, Competitors2 | |||||||
| Linde plc | |||||||
| Sherwin-Williams Co. | |||||||
| Average Payables Payment Period, Sector | |||||||
| Chemicals | |||||||
| Average Payables Payment Period, Industry | |||||||
| Materials | |||||||
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Payables Turnover
- The payables turnover ratio exhibits noticeable fluctuations over the analyzed period. Starting at 10.87 in 2015, the ratio declines steadily to a low of 6.69 by 2018, indicating a slower rate of payment to suppliers during this time. Subsequently, the ratio rebounds sharply in 2019 to 11.31, followed by a slight decrease to 10.73 in 2020, which suggests an acceleration in payment activity in the later years.
- Average Payables Payment Period
- The average payables payment period mirrors the inverse trend of the payables turnover ratio. It increases from 34 days in 2015 to a peak of 55 days in 2018, signifying that the company took longer to settle its payables during this interval. In 2019, this period shortens considerably to 32 days and remains close to this level (34 days) in 2020, reflecting a return to more prompt payments consistent with the higher turnover ratios observed in those years.
- Overall Analysis
- There is a clear inverse relationship between the payables turnover ratio and the average payables payment period across the years analyzed. The period from 2015 to 2018 shows a trend toward slower payments and reduced turnover, potentially indicating strategic payment deferrals or cash flow management considerations. The reversal of this trend in 2019 and 2020 suggests a shift towards quicker payments to suppliers, which could be influenced by changes in the company’s payment policies, supplier relationships, or liquidity conditions.
Cash Conversion Cycle
Air Products & Chemicals Inc., cash conversion cycle calculation, comparison to benchmarks
No. days
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| Average inventory processing period | |||||||
| Average receivable collection period | |||||||
| Average payables payment period | |||||||
| Short-term Activity Ratio | |||||||
| Cash conversion cycle1 | |||||||
| Benchmarks | |||||||
| Cash Conversion Cycle, Competitors2 | |||||||
| Linde plc | |||||||
| Sherwin-Williams Co. | |||||||
| Cash Conversion Cycle, Sector | |||||||
| Chemicals | |||||||
| Cash Conversion Cycle, Industry | |||||||
| Materials | |||||||
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period shows a notable decline from 35 days in 2015 and 2016 to a low of 21 days in 2017, indicating an improvement in inventory turnover efficiency. Following this, there is a gradual increase over the next three years reaching 25 days by 2020. This pattern suggests enhanced inventory management initially, followed by a slight relaxation or possible increased inventory levels in later years.
- Average Receivable Collection Period
- The average receivable collection period experienced minor fluctuations over the six-year span, starting at 52 days in 2015, peaking marginally at 55 days in 2016, and dipping to 49 days in 2018. Subsequently, it increased slightly to 53 days by 2020. Overall, the receivable collection period remained relatively stable, indicating consistent credit and collection practices without significant accelerations or delays.
- Average Payables Payment Period
- The average payables payment period increased steadily from 34 days in 2015 to a peak of 55 days in 2018, which may reflect extended payment terms or delayed payments to suppliers during this period. However, this was followed by a sharp decrease to 32 days in 2019 and a slight rise to 34 days in 2020, suggesting a return to more prompt payment practices after the 2018 peak.
- Cash Conversion Cycle
- The cash conversion cycle shows a pronounced downward trend from 53 days in 2015 to a low of 17 days in 2018, pointing to more efficient working capital management and faster conversion of inventories and receivables into cash. However, it then increases again to 44 days in both 2019 and 2020. This increase indicates a less aggressive cash conversion approach in the latter years, which might be linked to the simultaneous rise in the inventory processing period and changes in payables payment timing.