Baxter International Inc (BAX)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	5.69	6.84	4.70	5.51	6.56
Receivables turnover	5.16	5.32	4.50	10.35	11.11
Payables turnover	12.96	16.52	9.26	10.12	12.16
Working capital turnover	4.79	4.64	2.75	4.57	5.29

Inventory turnover measures how efficiently Baxter International Inc. manages its inventory. The company's inventory turnover has been trending downwards, from 3.99 in 2019 to 3.48 in 2023. This implies that in 2023, Baxter International is taking longer to sell its inventory compared to previous years.

Receivables turnover reflects how effectively the company collects payments from its customers. Baxter International's receivables turnover has also slightly declined over the years, from 5.99 in 2019 to 5.51 in 2023. This indicates a slower collection of receivables, which may impact the company's cash flow.

Payables turnover measures how quickly the company pays its suppliers. Baxter International has experienced fluctuations in payables turnover, but it has shown a general decreasing trend from 7.40 in 2019 to 7.93 in 2023. A lower payables turnover may mean the company is taking longer to pay its suppliers, possibly affecting relationships or cash management.

Working capital turnover indicates how efficiently the company uses its working capital to generate revenue. Baxter International's working capital turnover has been increasing over the years, from 2.66 in 2019 to 4.78 in 2023. This suggests that the company has improved its ability to generate sales relative to its working capital, potentially leading to better financial performance.

Overall, Baxter International Inc. should closely monitor its activity ratios to ensure efficient management of inventory, timely collection of receivables, and effective payment to suppliers in order to optimize its working capital turnover and overall financial performance.

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	64.10	53.34	77.61	66.24	55.63
Days of sales outstanding (DSO)	days	70.80	68.55	81.08	35.25	32.86
Number of days of payables	days	28.17	22.10	39.42	36.06	30.02

Activity ratios provide insight into how efficiently a company manages its assets and liabilities to generate sales.

1. Days of Inventory on Hand (DOH):
- Baxter International Inc.'s DOH has shown some fluctuations over the past five years, ranging from 91.40 days in 2019 to 116.60 days in 2021. The increasing trend until 2021 indicates a longer period of time required to sell inventory or possibly overstocking. However, the DOH decreased in 2022 and 2023, suggesting better inventory management efficiency.

2. Days of Sales Outstanding (DSO):
- Baxter's DSO has generally been consistent over the years, with a slight increase in 2021. A lower DSO indicates faster collection of receivables, which is positive for cash flow. The company has managed to keep DSO around 60-75 days, indicating a reasonable credit policy and effective collection efforts.

3. Number of Days of Payables:
- Baxter has shown fluctuations in the number of days of payables over the years, with the lowest at 42.79 days in 2022 and the highest at 59.23 days in 2021. A higher number of days of payables indicates the company is taking longer to pay its suppliers, which can be beneficial for cash flow management.

Overall, Baxter International Inc. has shown some improvements in its activity ratios, especially in managing inventory more efficiently and maintaining consistent collection of receivables. Keeping a balance between inventory, receivables, and payables is crucial for the company's operational efficiency and financial health.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	3.35	3.23	2.46	4.91	5.01
Total asset turnover	0.53	0.54	0.38	1.16	1.24

The long-term activity ratios for Baxter International Inc. indicate how efficiently the company is utilizing its fixed assets and total assets to generate revenue over the years.

1. Fixed asset turnover:
- The fixed asset turnover ratio has been steadily increasing from 2.52 in 2019 to 3.34 in 2023.
- This shows that Baxter International Inc. is able to generate more revenue per dollar of fixed assets invested, which is a positive trend indicating improved efficiency in utilizing fixed assets.

2. Total asset turnover:
- The total asset turnover ratio has fluctuated over the years, with the highest ratio of 0.62 in 2019 and the lowest of 0.38 in 2021.
- In 2023, the total asset turnover ratio stands at 0.52.
- While the total asset turnover ratio has not shown a consistent upward trend, the company is still generating revenue more efficiently per dollar of total assets than in 2021.

Overall, Baxter International Inc. has shown improvement in utilizing its fixed assets efficiently to generate revenue, as evidenced by the increasing trend in fixed asset turnover. However, there is room for further improvement in optimizing the utilization of total assets, as indicated by the fluctuating trend in total asset turnover ratios.