Arrowhead Pharmaceuticals Inc (ARWR)

Short-term

Turnover ratios

The activity ratios for Arrowhead Pharmaceuticals Inc indicate the efficiency of the company in managing its working capital and operating assets during the last five years.

1. Inventory Turnover: Arrowhead Pharmaceuticals did not provide data for inventory turnover for the last three years. However, in 2020 and 2021, the inventory turnover ratio was 13.70 and 20.46, respectively. This suggests that the company managed its inventory effectively, with a higher turnover indicating that inventory was sold off quickly.

2. Receivables Turnover: In 2022, the receivables turnover ratio was 172.50, a significant increase from the previous year. This indicates that Arrowhead Pharmaceuticals collected its accounts receivable at a much faster pace in 2022. The high turnover ratio suggests efficient management of credit sales and collection processes.

3. Payables Turnover: The payables turnover ratio for Arrowhead Pharmaceuticals improved over the years, from 2.93 in 2020 to 10.31 in 2024. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently, which can be beneficial in managing cash flow effectively.

4. Working Capital Turnover: The working capital turnover ratio measures how effectively a company is using its working capital to generate revenue. Arrowhead Pharmaceuticals had a relatively low working capital turnover ratio, with a noticeable increase from 0.31 in 2020 to 0.01 in 2024. This suggests that the company might not be efficiently utilizing its working capital to generate sales.

In conclusion, Arrowhead Pharmaceuticals Inc has shown improvements in its activity ratios over the years, particularly in receivables turnover and payables turnover. However, the company may need to focus on improving its working capital turnover to optimize the use of its working capital for generating revenue.

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Average number of days

Days of Inventory on Hand (DOH):
- Arrowhead Pharmaceuticals Inc has been gradually reducing its days of inventory on hand over the past five years, from 26.65 days in 2020 to an unspecified figure in 2024. This indicates a more efficient management of inventory levels, possibly through better forecasting or inventory control measures.

Days of Sales Outstanding (DSO):
- The company has significantly improved its days of sales outstanding over the years, dropping from 3.51 days in 2020 to an unspecified figure in 2022. This suggests that Arrowhead Pharmaceuticals has been able to collect payments from customers more quickly, potentially through tighter credit policies or more efficient billing and collection processes.

Number of Days of Payables:
- Arrowhead Pharmaceuticals has seen fluctuations in its number of days of payables over the last five years, ranging from a high of 124.63 days in 2023 to a low of 7.76 days in 2022. This variability may indicate changes in payment terms with suppliers or management's strategic decisions related to managing working capital.

Overall, the trend in these activity ratios demonstrates Arrowhead Pharmaceuticals' efforts to streamline its operations and enhance efficiency in managing inventories, accounts receivable, and accounts payable.

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Long-term

The fixed asset turnover ratio for Arrowhead Pharmaceuticals Inc has shown a declining trend over the past five years, decreasing from 2.85 in 2020 to 0.01 in 2024. This indicates that the company's ability to generate sales revenue from its fixed assets has significantly decreased. A lower fixed asset turnover ratio may suggest underutilization or impairment of fixed assets.

Similarly, the total asset turnover ratio has also exhibited a fluctuating pattern over the same period, ranging from 0.00 in 2024 to 0.35 in 2022. This ratio reflects the company's overall efficiency in utilizing its total assets to generate sales. The sharp decrease in 2024 signifies a potential inefficiency in asset utilization compared to previous years.

Overall, these long-term activity ratios indicate a concerning trend in Arrowhead Pharmaceuticals Inc's ability to efficiently utilize its assets to generate revenue, particularly in terms of fixed assets. This may raise flags regarding the company's operational efficiency and asset management strategies, highlighting the need for further evaluation and potential improvement initiatives.