Adtalem Global Education Inc (ATGE)

Short-term

Turnover ratios

The activity ratios of Adtalem Global Education Inc. provide insights into the efficiency of asset utilization and working capital management over the observed periods.

Inventory Turnover:
Historical data indicates that the company's inventory turnover rate was not available during most of 2020 and early 2021. Starting from December 2022, the inventory turnover increased significantly, reaching 289.28 times at the end of 2022. This upward trend continued into 2023, with ratios of 358.12 and 467.88 in the first half and third quarter of 2023, respectively. A decline was observed in December 2023, with the ratio decreasing to 210.56, suggesting improved inventory management and faster inventory movement. The high turnover ratios in late 2022 and 2023 reflect a period of rapid inventory utilization, potentially indicative of operational efficiency or shifts in product/service delivery.

Receivables Turnover:
Receivables turnover ratios fluctuate over the periods, with notable peaks at 16.36 in June 2021 and 17.72 in June 2022, signaling efficient collection processes during these times. Conversely, the ratio dropped to 7.31 in September 2021 and further to 9.52 in September 2023, implying relatively slower collection periods. The ratios generally hover between approximately 7.3 and 17.7, indicating moderate variability but an overall capacity to collect receivables within a reasonable timeframe.

Payables Turnover:
Payables turnover ratios portray variability, with higher values such as 11.74 in June 2022 and a notable decline to 4.74 in September 2021. The ratios tend to fluctuate around 7 to 11 during most of the periods, reflecting the company’s credit management practices with suppliers. The ratio of 10.70 in December 2024 indicates a period where payables were settled more swiftly within the typical range.

Working Capital Turnover:
Data on working capital turnover shows considerable fluctuation. Early periods demonstrate ratios below 4, indicative of moderate working capital efficiency. A striking peak of 27.97 occurs at the end of 2022, implying a highly efficient use of working capital during that period. A subsequent substantial increase to 74.91 in June 2024 suggests an exceptional utilization or management of working capital assets during that time, whereas other periods display significantly lower ratios, reflecting variability in operational cycle efficiency.

Summary:
Overall, the activity ratios reveal periods of high operational efficiency, particularly in inventory turnover during late 2022 and 2023, and in working capital turnover in mid-2022 and mid-2024. Variations in receivables and payables turnover ratios suggest adjustments in credit and payment policies over time. The fluctuations across these ratios highlight periods of enhanced operational performance and periods of relative slowdown or restructuring. Such trends should be considered in conjunction with other financial indicators and contextual factors to assess the company's overall operational health comprehensively.

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Average number of days

The activity ratios of Adtalem Global Education Inc., specifically focusing on days of inventory on hand (DOH), days of sales outstanding (DSO), and days of payables, reveal several key trends over the analyzed period.

Days of Inventory on Hand (DOH):
- Historical data for DOH is largely unrecorded (“— days”) up to December 2022, indicating either the measure was not relevant or not disclosed during that period.
- From December 31, 2022 onward, there is a measurable reduction in inventory days, decreasing from 1.73 days to 1.10 days by September 30, 2023, and slightly increasing to 1.73 days by December 31, 2023.
- This relatively low and decreasing inventory turnover duration suggests improved inventory efficiency, although the very short periods imply minimal inventory holdings—consistent with a service-oriented education provider with negligible physical inventory.

Days of Sales Outstanding (DSO):
- DSO fluctuated over the period, starting at approximately 34.09 days on September 30, 2020.
- There was a decline through the first part of 2021, reaching a low of 22.31 days as of June 30, 2021, indicating faster receivables collection during this period.
- However, in late 2021 and 2022, DSO increased notably, peaking at 49.96 days on September 30, 2021, and again at 38.33 days in September 2024.
- The ongoing fluctuations reflect changing credit collection efficiency and customer payment behaviors, with periods of extended receivables suggesting potential working capital considerations.

Number of Days of Payables:
- The payables period shows considerable variation, notably rising from approximately 31.65 days on June 30, 2021, to a peak of 76.96 days on September 30, 2021.
- The lengthening of payables, especially from September 2021 onwards, indicates a tendency to extend payment obligations, potentially as a liquidity management strategy.
- After reaching the peak in late 2021, the payables days mostly decreased to around 34.12 days in December 2024, suggesting improved payables management or altered payment terms.

Overall Analysis:
- The low and relatively stable inventory days are consistent with the company's service-based model; inventories are minimal or non-existent.
- Variability in DSO reflects periods of differing collection efficiency, with some periods of extended receivable days possibly impacting cash flow.
- The fluctuation and eventual reduction in days payables signify strategic management of payment schedules, possibly balancing supplier relations with cash flow objectives.

This analysis indicates a company with efficient inventory management, variable receivables collection periods, and strategic accounts payable practices, aligned with typical characteristics of a service education provider managing cash flows through receivable and payable timing.

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Long-term

The analysis of Adtalem Global Education Inc.'s long-term activity ratios, based on the provided data, reveals insightful trends over the specified periods.

Fixed Asset Turnover Ratio:
This ratio measures how efficiently the company utilizes its fixed assets to generate revenue from sales. From September 30, 2020, through March 31, 2021, the ratio remained relatively stable around 3.68 to 3.75, indicating consistent utilization of fixed assets during this period. A significant decrease is observed in June 30, 2021, where the ratio drops substantially to 2.39, suggesting less efficient use of fixed assets, possibly due to asset reconfiguration, impairment, or investment in asset-heavy initiatives. Post this decline, the ratio recovers sharply, reaching 5.16 by September 30, 2022, and continues an upward trajectory through December 31, 2022 (5.24), and March 31, 2023 (5.73). This indicates a improvement in asset efficiency, perhaps attributable to better asset management or operational efficiencies. However, a decline is observed again in September 2023 to 3.36, signaling potential challenges or changes in asset deployment. The period beyond September 2023 exhibits no data, preventing further analysis.

Total Asset Turnover Ratio:
This ratio assesses the company's ability to generate revenue from its total assets. Between September 30, 2020, and March 31, 2021, the ratio fluctuates modestly between 0.46 and 0.36, indicating moderate efficiency that slightly diminishes during this period. Following this, the trend improves gradually, with the ratio increasing to 0.52 by June 30, 2023. This steady rise reflects enhanced overall asset utilization over time. Notably, the most recent data up to June 30, 2025, shows the ratio reaching approximately 0.65, signifying ongoing improvements in asset efficiency and potentially more effective deployment of assets to generate revenue.

Summary:
Overall, Adtalem’s fixed asset turnover ratio exhibits volatility with a pronounced decline around mid-2021, followed by a recovery and upward trend through early 2023, with recent performance indicating cyclical operational efficiency that warrants attention. The total asset turnover ratio demonstrates a consistent improvement over time, reflecting enhanced efficiency in leveraging total assets to produce sales. The data suggests a company that has experienced periods of asset utilization challenges but is generally improving its overall asset efficiency in recent periods.