Align Technology Inc (ALGN)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	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
Inventory turnover	3.89	3.89	3.60	3.59	3.25	3.44	3.53	3.86	4.42	4.61	5.00	5.11	5.09	5.38	4.82	5.56	5.92	6.71	7.39	8.12
Receivables turnover	3.69	4.21	4.11	4.19	3.73	4.50	4.28	4.24	4.41	4.39	4.30	3.92	3.73	3.57	4.37	4.26	4.01	4.08	3.87	4.34
Payables turnover	10.21	11.56	10.22	8.57	8.61	7.94	7.51	5.70	6.21	5.46	3.97	6.19	4.99	5.56	6.66	9.25	7.60	10.05	9.68	8.89
Working capital turnover	10.16	6.58	10.43	11.32	7.49	5.59	6.97	6.53	6.93	5.65	6.49	3.90	4.72	6.51	10.40	3.62	3.63	3.61	3.28	3.28

Align Technology, Inc.'s activity ratios provide insights into its operational efficiency and management of assets and liabilities.

1. Inventory turnover: The company's inventory turnover has been relatively stable over the past eight quarters, with the ratio ranging between 3.25 and 3.89. This indicates that Align Technology is managing its inventory effectively, with the ability to sell and replace its inventory multiple times within a year.

2. Receivables turnover: The receivables turnover ratio fluctuates but generally remains above 3.5, indicating that the company efficiently collects payments from customers. The highest turnover was observed in Q4 2022 at 4.34, suggesting strong credit management practices.

3. Payables turnover: Align Technology's payables turnover has been increasing steadily, reaching a peak of 11.56 in Q3 2023. A high payables turnover ratio suggests that the company is paying its suppliers quickly, potentially benefiting from favorable credit terms.

4. Working capital turnover: The working capital turnover ratio has shown variability but generally an increasing trend over the quarters. This indicates that Align Technology is effectively utilizing its working capital to generate revenue. The peak in Q1 2023 at 11.32 implies efficient management of current assets and liabilities to support business operations.

In summary, Align Technology, Inc. demonstrates solid efficiency in managing inventory, receivables, payables, and working capital, suggesting effective asset utilization and operational performance. Continued monitoring of these activity ratios can help assess the company's ongoing operational efficiency and business sustainability.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	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
Days of inventory on hand (DOH)	days	93.79	93.84	101.37	101.69	112.32	106.14	103.52	94.62	82.61	79.18	72.98	71.43	71.71	67.82	75.79	65.65	61.70	54.40	49.37	44.96
Days of sales outstanding (DSO)	days	98.96	86.69	88.72	87.14	97.75	81.20	85.25	86.10	82.85	83.09	84.90	93.20	97.91	102.23	83.57	85.64	90.98	89.41	94.31	84.16
Number of days of payables	days	35.74	31.59	35.71	42.57	42.40	45.95	48.62	64.02	58.81	66.87	91.89	58.94	73.20	65.67	54.84	39.44	48.04	36.33	37.70	41.04

To analyze the activity ratios of Align Technology, Inc., we will focus on three key ratios: days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables.

1. Days of Inventory on Hand (DOH):
- The trend of DOH has shown a slight improvement in Q4 2023 compared to the previous quarter, indicating that Align Technology is managing its inventory levels more efficiently.
- Historically, the DOH has been on a decreasing trend since Q2 2022, suggesting that the company has been able to better control its inventory levels over time.
- A lower DOH indicates that the company is selling its products more quickly and efficiently managing its inventory, which can lead to improved cash flow and profitability.

2. Days of Sales Outstanding (DSO):
- DSO has fluctuated over the quarters, with a decrease in Q4 2023 compared to the previous quarter.
- However, compared to Q4 2022 when DSO was at its lowest, there has been an increase in the days it takes for the company to collect its accounts receivable.
- A lower DSO is generally preferred as it indicates that the company is collecting payments faster, improving its cash flow position.

3. Number of Days of Payables:
- The number of days of payables has varied over the quarters, with a slight increase in Q4 2023 compared to the previous quarter.
- The trend shows a decrease in payables days compared to Q1 2022, indicating that the company is paying its suppliers more promptly.
- A lower number of days of payables could signal better relationships with suppliers or improved cash management practices.

Overall, Align Technology, Inc. has shown improvements in managing its inventory levels and payables, which can positively impact its cash flow and operational efficiency. However, the fluctuation in DSO indicates a need for continued focus on collecting receivables in a timely manner to enhance liquidity and working capital management.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	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
Fixed asset turnover	2.99	3.00	2.92	2.93	3.03	3.22	3.37	3.53	3.65	3.75	3.62	3.69	3.36	3.25	3.23	3.63	3.81	3.78	3.65	3.61
Total asset turnover	0.63	0.60	0.61	0.63	0.63	0.65	0.69	0.68	0.67	0.66	0.64	0.56	0.51	0.52	0.54	0.61	0.96	0.97	0.93	0.93

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. For Align Technology, Inc., the fixed asset turnover ratio has been relatively stable over the past eight quarters, ranging from 2.92 to 3.22. This indicates that the company is effectively generating revenue from its investment in fixed assets such as property, plant, and equipment.

On the other hand, the total asset turnover ratio measures how efficiently the company is using all its assets to generate sales. Align Technology, Inc.'s total asset turnover ratio has also been relatively consistent, ranging from 0.60 to 0.69 over the same period. This suggests that the company is effectively generating revenue in relation to its total asset base.

Overall, Align Technology, Inc. appears to be efficiently utilizing both its fixed assets and total assets to generate sales, as indicated by the stable and relatively high turnover ratios over the past eight quarters.