Avantor Inc (AVTR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.56 | 5.37 | 5.60 | 5.83 | 5.79 |
| Receivables turnover | 6.06 | 6.17 | 6.04 | 5.74 | 6.11 |
| Payables turnover | 7.35 | 6.48 | 6.47 | 6.35 | 7.35 |
| Working capital turnover | 7.70 | 7.52 | 7.20 | 6.47 | 6.38 |
Avantor Inc's activity ratios provide insights into the efficiency of the company's operations in managing its assets and liabilities.
- Inventory turnover has remained relatively stable over the past five years, averaging around 5.6 times per year. This indicates that on average, Avantor sells and replenishes its inventory about 5 to 6 times a year. A higher turnover typically signifies efficient inventory management.
- Receivables turnover has been steady, averaging around 6 times per year. This demonstrates that Avantor collects its accounts receivable approximately 6 times a year on average. A consistent turnover ratio suggests effective credit and collection policies.
- Payables turnover has shown some variability but has generally been in the range of 6 to 7 times per year. This implies that Avantor pays its suppliers approximately 6 to 7 times a year. A higher turnover indicates that the company is paying its suppliers more frequently.
- Working capital turnover has been on an increasing trend over the past five years, indicating that Avantor is generating more revenue relative to its working capital investment. A higher turnover ratio suggests efficient utilization of working capital resources.
Overall, Avantor Inc's activity ratios reflect a relatively efficient management of inventory, receivables, payables, and working capital, which are essential for sustaining the company's operations and financial health.
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 | 65.66 | 67.91 | 65.18 | 62.59 | 63.01 |
| Days of sales outstanding (DSO) | days | 60.26 | 59.20 | 60.39 | 63.56 | 59.75 |
| Number of days of payables | days | 49.63 | 56.37 | 56.44 | 57.45 | 49.63 |
Activity ratios such as Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables provide insights into how efficiently Avantor Inc manages its inventory, collects its receivables, and pays its suppliers.
1. Days of Inventory on Hand (DOH) measures how many days, on average, inventory is held before being sold. Avantor's DOH has slightly decreased from 67.91 days in 2022 to 65.66 days in 2023. This indicates that the company is managing its inventory more efficiently in 2023 compared to the previous year.
2. Days of Sales Outstanding (DSO) represents the average number of days it takes for the company to collect its accounts receivables. Avantor's DSO has increased slightly from 59.20 days in 2022 to 60.26 days in 2023. This suggests that the company is taking slightly longer to collect its receivables in 2023 compared to the previous year.
3. Number of Days of Payables measures the average number of days it takes for the company to pay its suppliers. Avantor's number of days of payables has decreased from 56.37 days in 2022 to 49.63 days in 2023. This indicates that the company is paying its suppliers more quickly in 2023 compared to the previous year.
Overall, Avantor Inc has improved its inventory management efficiency in 2023, but there is a slight increase in the collection period for receivables. Additionally, the company has been paying its suppliers more promptly in 2023. These ratios collectively provide a snapshot of Avantor's operational efficiency and working capital management in the specified period.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 9.45 | 10.33 | 10.47 | 11.63 | 10.84 |
| Total asset turnover | 0.54 | 0.56 | 0.53 | 0.65 | 0.62 |
Long-term activity ratios provide insights into how effectively a company is utilizing its assets to generate revenue. Avantor Inc's fixed asset turnover has been relatively stable over the past five years, ranging from 9.45 to 11.63. This indicates that the company is efficient in generating revenue from its fixed assets, such as property, plant, and equipment.
On the other hand, the total asset turnover ratio has shown some fluctuations over the same period, ranging from 0.53 to 0.65. A lower total asset turnover ratio suggests that Avantor Inc is generating less revenue per dollar of total assets, which could be due to a higher proportion of non-operating or underutilized assets in the company's asset base.
In conclusion, while Avantor Inc demonstrates strong efficiency in utilizing its fixed assets to generate revenue, there may be opportunities for the company to improve its overall asset turnover efficiency and optimize the use of its total assets to drive higher revenue generation.