Amgen Inc (AMGN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 1.90 | 3.04 | 3.53 | 1.89 | 1.54 |
| Receivables turnover | 3.22 | 8.02 | 8.70 | 4.78 | 5.02 |
| Payables turnover | 11.38 | 9.53 | 10.56 | 5.17 | 4.02 |
| Working capital turnover | 2.14 | 7.89 | 7.05 | 2.68 | 4.17 |
Inventory Turnover:
- The inventory turnover for AMGEN Inc. has fluctuated over the past five years, ranging from 0.89 to 1.58.
- The decreasing trend in inventory turnover from 2021 to 2023 indicates that the company is holding onto its inventory for a longer period, which could potentially lead to increased carrying costs and storage expenses.
Receivables Turnover:
- AMGEN Inc.'s receivables turnover has also shown a decreasing trend from 2019 to 2023.
- This suggests that the company is taking longer to collect payments from its customers, which could impact its cash flow and liquidity position.
Payables Turnover:
- The payables turnover for AMGEN Inc. has been increasing over the past five years, indicating that the company is taking longer to pay its suppliers.
- A higher payables turnover may suggest improved supplier relationships but could also indicate potential liquidity issues if the company is delaying payments.
Working Capital Turnover:
- AMGEN Inc.'s working capital turnover has also fluctuated over the years, with the highest value observed in 2022 and the lowest in 2020.
- A higher working capital turnover ratio generally indicates efficient utilization of working capital to generate sales revenue, while a decreasing trend may signal inefficiencies in managing working capital.
Overall, a declining trend in inventory and receivables turnover, along with increasing payables turnover, may indicate potential concerns regarding AMGEN Inc.'s management of operating assets and liabilities, necessitating a closer review of its working capital management strategies.
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 | 191.97 | 120.07 | 103.41 | 193.51 | 237.24 |
| Days of sales outstanding (DSO) | days | 113.38 | 45.50 | 41.95 | 76.43 | 72.68 |
| Number of days of payables | days | 32.07 | 38.29 | 34.57 | 70.63 | 90.75 |
Activity ratios provide insights into how efficiently a company is managing its assets and operations. Let's analyze AMGEN Inc.'s activity ratios based on the provided data:
1. Days of Inventory on Hand (DOH):
- The trend in DOH over the past five years shows fluctuations, with a significant increase from 2020 to 2023.
- AMGEN Inc. held inventory for an average of 411.08 days in 2023, which indicates a slower turnover of inventory compared to previous years.
- A high DOH value may suggest overstocking or slow sales, potentially leading to higher carrying costs and obsolete inventory.
2. Days of Sales Outstanding (DSO):
- The DSO for AMGEN Inc. has increased steadily from 2019 to 2023, indicating longer periods in collecting receivables from customers.
- In 2023, it took the company an average of 96.33 days to collect revenue from sales, which is a longer duration compared to previous years.
- A high DSO value could indicate potential issues with credit policies, collection efficiency, or deteriorating customer credit quality.
3. Number of Days of Payables:
- The number of days of payables for AMGEN Inc. has fluctuated over the five-year period, with a decrease from 2019 to 2023.
- In 2023, the company took an average of 68.67 days to pay its suppliers, indicating a shorter payment period compared to previous years.
- A lower number of days of payables may suggest a more aggressive payment approach, possibly to take advantage of early payment discounts or maintain good supplier relationships.
Overall, the analysis of AMGEN Inc.'s activity ratios reveals trends that reflect changes in inventory management, receivables collection efficiency, and payment practices. Further investigation into the underlying reasons for these trends can provide valuable insights into the company's operations and financial performance.
See also:
Amgen Inc 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 | 4.30 | 9.45 | 9.80 | 5.20 | 4.74 |
| Total asset turnover | 0.26 | 0.79 | 0.83 | 0.40 | 0.39 |
Long-term activity ratios provide insights into how efficiently a company is utilizing its assets to generate sales. In the case of AMGEN Inc., the fixed asset turnover ratio has been consistently high over the past five years, ranging from 4.74 to 5.20. This indicates that the company is effectively generating sales in relation to its investment in fixed assets such as property, plant, and equipment.
However, the total asset turnover ratio for AMGEN Inc. has been relatively low, fluctuating between 0.29 to 0.42 during the same period. This suggests that the company may not be as efficient in utilizing all of its assets, including both fixed and current assets, to generate sales. A lower total asset turnover ratio may indicate underutilization of assets or a need to improve overall asset management efficiency.
Overall, while AMGEN Inc. demonstrates strong efficiency in generating sales from its fixed assets, there may be opportunities for the company to enhance its overall asset utilization to improve its total asset turnover ratio. This could involve better inventory management, optimizing the use of current assets, or evaluating the need for additional investment in fixed assets to further boost sales performance.