Align Technology Inc (ALGN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.72 | 3.89 | 3.25 | 4.42 | 5.09 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 8.80 | 10.16 | 7.49 | 6.93 | 4.72 |
Based on the provided data for Align Technology Inc, I will analyze the activity ratios:
1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently a company manages its inventory. A higher ratio indicates that the company sells its products quickly.
- Align Technology Inc's inventory turnover has been decreasing over the years, from 5.09 in 2020 to 4.72 in 2024. This suggests that the company is taking longer to sell its inventory, which might indicate potential issues in managing inventory levels or changes in demand.
2. Receivables Turnover:
- Receivables turnover ratio evaluates how efficiently a company collects payments from its customers. A higher ratio signifies prompt collection of receivables.
- The data provided does not show information on receivables turnover for Align Technology Inc, which makes it difficult to assess the effectiveness of the company's credit and collection policies.
3. Payables Turnover:
- Payables turnover ratio helps in understanding how quickly a company pays its suppliers. A higher ratio may indicate that the company is managing its payables effectively.
- Similar to receivables turnover, no data is available for payables turnover for Align Technology Inc, so it is challenging to evaluate the company's payment practices towards suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio assesses how efficiently a company utilizes its working capital to generate sales. A higher ratio implies better utilization of working capital.
- Align Technology Inc's working capital turnover has shown an increasing trend, from 4.72 in 2020 to 8.80 in 2024. This indicates that the company has been more effective in utilizing its working capital to generate revenue over the years.
In conclusion, while the company has shown improvement in utilizing its working capital, the decreasing trend in inventory turnover raises concerns about inventory management. However, due to the lack of data on receivables and payables turnover, a comprehensive analysis of Align Technology Inc's overall efficiency in managing its assets and liabilities is limited.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 77.36 | 93.79 | 112.32 | 82.61 | 71.71 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Based on the provided data, let's analyze the activity ratios for Align Technology Inc:
1. Days of Inventory on Hand (DOH):
- The company's inventory turnover has fluctuated over the years, ranging from 71.71 days in 2020 to 112.32 days in 2022. This indicates that, on average, the company held its inventory for around 71 to 112 days before selling it.
- A higher number of days of inventory on hand can suggest issues with inventory management, such as overstocking or slow-moving inventory. Conversely, a lower number indicates more efficient inventory turnover.
2. Days of Sales Outstanding (DSO):
- Unfortunately, the data provided does not include information on the Days of Sales Outstanding for Align Technology Inc. DSO measures how long it takes for a company to collect its accounts receivable. Lower DSO values are generally preferred as they indicate faster cash conversion from sales.
3. Number of Days of Payables:
- Similarly, the data does not provide details on the Number of Days of Payables for Align Technology Inc. This ratio measures how long it takes for a company to pay its suppliers. A higher number of days of payables may indicate an ability to delay payments, potentially preserving cash flow.
In conclusion, a detailed analysis of activity ratios, particularly Days of Inventory on Hand, can provide insights into how efficiently a company manages its inventory levels. For a more comprehensive evaluation, it would be beneficial to have additional data on Days of Sales Outstanding and Number of Days of Payables to better assess Align Technology Inc's overall working capital management.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 2.76 | 3.29 | 3.36 |
| Total asset turnover | 0.64 | 0.63 | 0.63 | 0.67 | 0.51 |
The fixed asset turnover ratio measures how efficiently a company generates revenue from its fixed assets. Align Technology Inc's fixed asset turnover has shown a slight decrease over the years, from 3.36 in December 2020 to 2.76 in December 2022. The decreasing trend in this ratio could indicate a reduction in the company's ability to generate sales from its fixed assets.
Total asset turnover, on the other hand, indicates how effectively a company utilizes its total assets to generate sales. Align Technology Inc's total asset turnover ratio has shown some fluctuation but has remained relatively stable, ranging from 0.51 in December 2020 to 0.64 in December 2024. This suggests that the company is generating a consistent level of sales relative to its total assets.
Overall, while the fixed asset turnover ratio has shown a decline, the total asset turnover ratio has remained relatively steady. This may indicate that Align Technology Inc's efficiency in utilizing its total assets to generate sales is more consistent compared to its efficiency in generating revenue from fixed assets specifically.