Alkermes Plc (ALKS)

Short-term

Turnover ratios

The activity ratios for Alkermes plc provide insight into how efficiently the company is managing its resources and operating cycle.

1. Inventory turnover: Alkermes plc has shown a fluctuating trend in inventory turnover over the past five years, ranging from 1.20 to 1.77. This ratio indicates how many times during the year the company sells and replaces its inventory. A lower ratio suggests potentially slower sales or excess inventory, while a higher ratio may indicate effective inventory management.

2. Receivables turnover: The company's receivables turnover has also varied from 3.75 to 5.00 over the same period. This ratio reflects how quickly Alkermes plc collects cash from its credit sales, with higher ratios indicating faster collection periods. The improving trend over the years suggests enhanced efficiency in collecting outstanding receivables.

3. Payables turnover: Alkermes plc experienced significant fluctuations in payables turnover, with the ratio fluctuating from 3.32 to 6.64. This ratio measures how quickly the company pays its suppliers, with a higher ratio potentially indicating a more efficient use of trade credit terms. However, the inconsistency in the ratio over the years may warrant further investigation into the company's payment practices and relationships with suppliers.

4. Working capital turnover: The working capital turnover ratio for Alkermes plc has ranged from 1.54 to 2.05, showcasing how effectively the company is utilizing its working capital to generate sales. A higher ratio indicates efficient utilization of working capital to generate revenue, while a declining trend might suggest a need for improvement in managing and deploying working capital resources.

Overall, analyzing these activity ratios provides valuable insights into Alkermes plc's operational efficiency, inventory management, receivables collection, payables management, and working capital utilization over the past five years. It is essential for the company to continue monitoring and optimizing these ratios to enhance its overall financial performance and operational effectiveness.

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Average number of days

Alkermes plc's activity ratios, specifically the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables, provide insights into the company's efficiency in managing its inventory, collecting receivables, and paying its suppliers.

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows an increasing pattern from 205.99 days in 2019 to 268.89 days in 2023.
- Alkermes plc is holding its inventory for longer periods, which could indicate inefficiencies in inventory management or challenges in selling its products.
- A high DOH can tie up valuable capital in inventory and may suggest the need for improvement in inventory turnover.

2. Days of Sales Outstanding (DSO):
- The DSO ratio fluctuated over the years, ranging from 72.96 days in 2023 to 97.39 days in 2021.
- Alkermes plc takes, on average, 72.96 days to collect payment from its customers after making sales, indicating a satisfactory level of efficiency in managing its receivables.
- A lower DSO suggests that the company is effective in collecting payments promptly, which is a positive sign for its cash flow.

3. Number of Days of Payables:
- The data for 2023 shows no specific value for the Number of Days of Payables, which could indicate a change in reporting or calculation methodology.
- In the previous years, the trend in payables days demonstrates fluctuations, with an increase from 94.23 days in 2020 to 109.79 days in 2019.
- A higher Number of Days of Payables suggests that the company is taking longer to pay its suppliers, which could reflect favorable terms negotiated with vendors.

In conclusion, Alkermes plc's activity ratios indicate potential areas of improvement in managing its inventory levels and optimizing payment cycles. The company may benefit from focusing on reducing inventory holding periods while maintaining efficient collections and favorable payables terms with suppliers.

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Long-term

The fixed asset turnover ratio for Alkermes plc has shown a positive trend over the past five years, increasing from 3.23 in 2019 to 7.33 in 2023. This indicates that the company has been able to generate more sales revenue relative to its investment in fixed assets, suggesting improved efficiency in utilizing its long-term assets to generate sales.

In contrast, the total asset turnover ratio has also shown improvement, albeit at a slower pace compared to the fixed asset turnover ratio. It has increased from 0.65 in 2019 to 0.78 in 2023. This indicates that Alkermes plc has been able to generate more sales revenue relative to its total assets over the years, though the improvement has been more gradual compared to the fixed asset turnover.

Overall, the increasing trend in both the fixed asset turnover and total asset turnover ratios suggests that Alkermes plc has been more efficient in utilizing its long-term assets to generate sales revenue. This improved efficiency reflects positively on the company's operational performance and management of its long-term assets.