Adtalem Global Education Inc (ATGE)

Short-term

Turnover ratios

The activity ratios for Adtalem Global Education Inc. over the specified periods exhibit notable trends and shifts:

1. Inventory Turnover: Inventory turnover data is unavailable for June 30, 2021, and June 30, 2022, but a significant spike is observed in June 30, 2023, reaching 467.88. The absence of data for subsequent years suggests either negligible inventory levels or a lack of inventory assets, which aligns with the nature of educational services that typically do not hold substantial inventory. The dramatic increase indicates that inventory management was minimal or that the inventory component became effectively obsolete or irrelevant in assessing activity.

2. Receivables Turnover: The receivables turnover ratio demonstrates a declining trend from 20.89 in June 2021 to 14.12 in June 2023, followed by further decreases to 12.49 in June 2024 and 12.23 in June 2025. This decline indicates a gradual lengthening of the average collection period, suggesting that the company is taking more time to convert receivables into cash, which could reflect changes in credit policies, customer payment behaviors, or shifts in the composition of its receivables.

3. Payables Turnover: The payables turnover ratio remains relatively stable between 11.53 in June 2021 and 11.55 in June 2022 but then declines to 7.93 in June 2023 and further to approximately 6.81 and 6.85 in subsequent years. The decreasing ratio suggests an extension in the average payment period to suppliers and vendors, potentially indicating a strategic effort to manage working capital or altered supplier payment terms.

4. Working Capital Turnover: The working capital turnover ratio shows a significant increase from 0.81 on June 30, 2021, to 10.48 on June 30, 2022, and further to 30.65 by June 30, 2023. The absence of this ratio in subsequent years prevents analysis beyond 2023 but indicates an increasing efficiency in utilizing working capital to generate revenue during this period. The sharp rise may reflect improved operational efficiency or a policy of leveraging working capital more effectively.

In summary, the activity ratios suggest a period of operational adjustment, with increasing efficiency in working capital utilization up to 2023. The decline in receivables and payables turnover ratios indicates a trend toward longer collection and payment periods, possibly reflecting strategic liquidity management or shifts in operational practices. The inventory turnover ratio does not provide meaningful insights beyond the notable spike, aligning with the typical asset profile of an educational services provider.

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Average number of days

The activity ratios of Adtalem Global Education Inc, as reflected in the provided data, indicate several notable trends over the fiscal periods up to June 30, 2025.

Days of Inventory on Hand (DOH): Data are only available for June 30, 2023, with a minimal inventory holding period of 0.78 days. Prior to this, inventory data are not available, suggesting that inventory management may not be a significant component of the company's operational activity or that inventory data are not well-tracked due to the nature of the company's business, which is predominantly service-oriented and possibly involves negligible physical inventory.

Days of Sales Outstanding (DSO): The DSO increased steadily from 17.47 days in 2021 to 25.85 days in 2023. This signifies that, on average, the company took progressively longer to collect payments from its customers, suggesting a potential elongation of receivable collection periods or changes in credit policies. The trend continues modestly into 2024 and 2025, reaching approximately 29.84 days, indicating a gradual lengthening in the receivables collection cycle over time.

Number of Days of Payables: The days payable outstanding demonstrate an increasing trend from approximately 31.65 days in 2021 to around 46.05 days in 2023. This suggests that the company extended its payment periods to suppliers significantly during this interval. The trend persists into the subsequent periods, with payables days reaching approximately 53.62 days in 2024 and slightly decreasing marginally to 53.28 days in 2025.

Overall Interpretation: The data depict a pattern where the company is taking longer to collect receivables and is also delaying its payments to suppliers, resulting in an extended operating cycle. The elongation of DSO indicates that cash inflow from customers is becoming more stretched over time, raising potential concerns regarding liquidity management. Concurrently, the increased days payable imply that the company is utilizing supplier credit to finance its operations more extensively. The minimal inventory holding and the absence of inventory data points reaffirm that the core operations are likely service-based, with little emphasis on inventory management.

In summary, Adtalem's activity ratios suggest a gradual lengthening of the company's working capital cycle, characterized by longer receivable collection periods and extended supplier payment terms, which may impact liquidity and cash flow management strategies.

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Long-term

The analysis of Adtalem Global Education Inc.'s long-term activity ratios reveals significant improvements over the period from June 30, 2021, to June 30, 2023. The fixed asset turnover ratio, which measures how efficiently the company utilizes its fixed assets to generate revenue, increased markedly from 1.93 in 2021 to 4.78 in 2022, and further to 5.61 in 2023. This upward trend indicates that the company has become substantially more effective in leveraging its fixed assets to generate sales, possibly through optimizing asset utilization or reallocating assets to more productive activities.

Similarly, the total asset turnover ratio, which assesses the overall efficiency in utilizing all assets to produce revenue, also exhibited a steady improvement, rising from 0.29 in 2021 to 0.46 in 2022, and reaching 0.52 in 2023. Such progression suggests enhanced operational efficiency across the company's total asset base, likely driven by better management practices, increased sales relative to asset investment, or strategic asset management.

For the projected periods up to 2024 and 2025, the ratios are not yet available. However, based on the observed trends, it is plausible to infer that these ratios could continue to improve if the company's strategies for asset utilization remain effective. The consistent upward trajectory in both fixed asset and total asset turnover ratios reflects a positive trend in long-term activity efficiency, indicative of the company's increasing effectiveness in deploying its assets to generate revenue over the period analyzed.