Abbott Laboratories (ABT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.78 | 5.33 | 6.20 | 5.36 | 5.78 |
| Receivables turnover | 6.01 | 6.93 | 6.56 | 5.31 | 5.74 |
| Payables turnover | 7.31 | 7.15 | 7.25 | 6.81 | 7.67 |
| Working capital turnover | 4.47 | 4.43 | 3.82 | 3.99 | 6.49 |
Inventory turnover measures how efficiently Abbott Laboratories manages its inventory. The trend over the past five years indicates a slight decrease from 3.07 in 2019 to 2.74 in 2023, suggesting a longer time to sell inventory compared to previous years.
Receivables turnover reflects how effectively Abbott collects payments from its customers. The data shows an overall increasing trend from 5.88 in 2019 to 6.11 in 2023, indicating an improvement in the collection process over the years.
Payables turnover assesses how quickly Abbott pays its creditors. The slight fluctuations suggest a stable payment pattern, with a relatively consistent performance over the past five years.
Working capital turnover measures how efficiently Abbott utilizes its working capital to generate revenue. The trend displays some variation, but fluctuations are within a reasonable range. The highest turnover was in 2019 at 6.64, indicating that in that year, Abbott Laboratories generated $6.64 in revenue for every dollar of working capital.
Overall, the activity ratios of Abbott Laboratories reveal varying levels of efficiency in managing inventory, collecting receivables, paying creditors, and utilizing working capital over the past five years.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 76.40 | 68.44 | 58.89 | 68.09 | 63.19 |
| Days of sales outstanding (DSO) | days | 60.77 | 52.67 | 55.66 | 68.71 | 63.54 |
| Number of days of payables | days | 49.95 | 51.08 | 50.34 | 53.61 | 47.61 |
To analyze Abbott Laboratories' activity ratios, we will examine the days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables over the five-year period from 2019 to 2023.
1. Days of Inventory on Hand (DOH):
- The DOH measures the average number of days it takes for a company to sell its inventory.
- Over the five-year period, Abbott Laboratories' inventory turnover has increased from 119.06 days in 2019 to 133.41 days in 2023.
- A higher DOH value indicates that it takes longer to sell inventory, which may tie up capital and result in higher storage costs.
2. Days of Sales Outstanding (DSO):
- The DSO ratio shows the average number of days it takes for a company to collect payment after making a sale.
- Abbott Laboratories' DSO has fluctuated over the years, ranging from 51.99 days in 2022 to 67.65 days in 2020, and has improved to 59.74 days in 2023.
- A lower DSO value is generally preferable as it indicates quicker collection of receivables and better management of cash flow.
3. Number of Days of Payables:
- This ratio represents how long a company takes to pay its suppliers.
- Abbott Laboratories' days of payables ranged from 86.80 days in 2021 to 96.00 days in 2020, with a slight decrease to 87.21 days in 2023.
- A longer period of payables may indicate favorable credit terms with suppliers, but it could also suggest potential liquidity issues if payments are being delayed significantly.
In summary, Abbott Laboratories has seen changes in its activity ratios over the years, with improvements in DSO and slight fluctuations in DOH and payables. These ratios provide insights into the company's efficiency in managing inventory, collecting receivables, and paying suppliers, which are crucial aspects of its operational performance and cash flow management.
See also:
Abbott Laboratories Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.88 | 4.70 | 4.75 | 3.77 | 3.88 |
| Total asset turnover | 0.54 | 0.58 | 0.57 | 0.47 | 0.46 |
The long-term activity ratios of Abbott Laboratories, specifically the fixed asset turnover and total asset turnover, provide insight into the company's efficiency in generating sales relative to its investment in assets.
1. Fixed asset turnover: This ratio indicates how efficiently Abbott Laboratories is utilizing its fixed assets to generate revenue. The trend in the fixed asset turnover ratio shows a slight decline from 2019 to 2023. In 2019, the company had a fixed asset turnover of 3.97, which decreased to 3.95 by 2023. This suggests a slightly lower efficiency in generating sales from fixed assets over the years. However, the ratio remains relatively stable, indicating that Abbott Laboratories is still efficiently utilizing its fixed assets to generate revenue.
2. Total asset turnover: This ratio measures how effectively Abbott Laboratories is using all its assets to generate sales. The total asset turnover ratio shows an increasing trend from 2019 to 2023. In 2019, the ratio was 0.47, and it increased to 0.55 by 2023. This improvement indicates that the company has become more efficient in generating sales relative to its total assets over the years.
Overall, while the fixed asset turnover ratio has shown a slight decline, the total asset turnover ratio has improved, indicating that Abbott Laboratories has enhanced efficiency in utilizing its total assets to generate sales. This analysis suggests that the company is effectively managing its assets to drive revenue growth and operational performance over the long term.