Becton Dickinson and Company (BDX)

Activity ratios

Short-term

Turnover ratios

	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Inventory turnover	5.58	5.17	6.23	3.10	3.49
Receivables turnover	7.64	8.61	7.66	6.70	7.37
Payables turnover	11.14	9.80	9.83	6.27	8.24
Working capital turnover	9.52	57.18	8.65	5.13	17.14

The activity ratios of Becton Dickinson & Co. provide insight into the efficiency of the company's use of its assets and management of working capital.

The inventory turnover ratio indicates that Becton Dickinson & Co. turned over its inventory 3.42 times during the fiscal year ending September 30, 2023, compared to 3.22 times in the previous year. This suggests that the company managed its inventory slightly more efficiently, generating sales relative to its inventory. However, the ratio is lower compared to 2021, indicating a slowdown in inventory turnover efficiency.

The receivables turnover ratio decreased to 7.64 in 2023 from 8.61 in 2022. This reveals that Becton Dickinson & Co. collected its receivables approximately 7.64 times during the year, compared to 8.61 times in the previous year. The decline suggests a slower collection of receivables, which may potentially indicate less efficient credit and collection policies.

The payables turnover ratio improved to 6.83 in 2023 from 6.12 in 2022, indicating that the company paid its suppliers more frequently. This may be indicative of improved liquidity and better payment management.

The working capital turnover ratio for 2023 significantly decreased to 9.51 compared to a remarkably high 57.18 in 2022. This suggests that the company's working capital was turned over 9.51 times during the period, a significant decline from the previous year. This may indicate a decrease in the efficiency of utilizing working capital to generate sales in 2023.

Overall, the analysis of the activity ratios for Becton Dickinson & Co. indicates mixed results, with some improvement in payables turnover and a decrease in working capital turnover, potentially indicating varying levels of efficiency in managing assets and working capital over the years.

Average number of days

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Days of inventory on hand (DOH)	days	65.36	70.66	58.58	117.83	104.57
Days of sales outstanding (DSO)	days	47.74	42.38	47.64	54.45	49.50
Number of days of payables	days	32.77	37.23	37.14	58.21	44.28

Days of Inventory on Hand (DOH) measures the average number of days it takes for Becton Dickinson & Co. to turn its inventory into sales. Over the past five years, the trend indicates an increase in DOH, suggesting that the company is taking longer to sell its inventory. This may imply either inefficiency in managing inventory or a change in the nature of the business, such as a shift towards higher-value and longer-lead-time products.

Days of Sales Outstanding (DSO) indicates the average number of days it takes for the company to collect revenue after making a sale. The trend shows a slight increase in DSO over the period, implying that the company may be experiencing challenges in collecting its accounts receivable in a timely manner. This could potentially lead to liquidity concerns if not managed effectively.

The Number of Days of Payables reflects the average number of days it takes for Becton Dickinson & Co. to pay its suppliers. The trend indicates an increase in the number of days of payables over the past five years, suggesting that the company is taking longer to settle its payables. This may indicate either a deliberate strategy to optimize cash flow or potential challenges in managing supplier relationships.

Overall, the analysis of these activity ratios highlights potential areas of concern for Becton Dickinson & Co., particularly in inventory management, accounts receivable collection, and payables settlement. Further investigation would be necessary to understand the underlying causes and implications of these trends for the company's operational and financial performance.

Long-term

	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Fixed asset turnover	2.95	3.14	3.19	2.71	3.06
Total asset turnover	0.37	0.36	0.36	0.30	0.33

The fixed asset turnover ratio measures how efficiently a company is using its fixed assets to generate sales. Becton Dickinson & Co.'s fixed asset turnover has exhibited some fluctuation over the past five years, with a high of 3.17 in 2021 and a low of 2.89 in 2020. The ratio decreased slightly to 2.95 in 2023, indicating that the company generated $2.95 in sales for every dollar invested in fixed assets during the year. This may suggest a decrease in the efficiency of utilizing fixed assets to generate sales.

On the other hand, the total asset turnover ratio reflects the efficiency of the company in generating sales from all of its assets. Becton Dickinson & Co.'s total asset turnover has also shown fluctuations, with a high of 0.38 in 2021 and a low of 0.32 in 2020. The ratio slightly increased to 0.37 in 2023, indicating that the company generated $0.37 in sales for every dollar invested in total assets during the year.

Overall, the fixed asset turnover and total asset turnover ratios both indicate that Becton Dickinson & Co. has been able to generate sales relatively efficiently from its fixed and total assets, though there has been some variation in the efficiency over the past five years. It is important to further analyze the reasons behind these fluctuations to understand the company's long-term asset utilization trends.