Becton Dickinson and Company (BDX)

Activity ratios

Short-term

Turnover ratios

	Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Inventory turnover	4.63	5.58	5.17	6.23	3.10
Receivables turnover	6.65	7.64	8.61	7.66	6.70
Payables turnover	9.39	11.14	9.80	9.83	6.27
Working capital turnover	13.35	9.52	57.18	8.65	5.13

The activity ratios of Becton Dickinson and Company provide insights into the efficiency of the company in managing its inventory, receivables, payables, and working capital.

- Inventory turnover: The inventory turnover ratio measures how many times a company sells and replaces its inventory during a period. Becton Dickinson's inventory turnover has been relatively stable over the past five years, ranging from 3.10 to 6.23. A higher turnover indicates that the company is efficiently managing its inventory levels and selling products quickly.

- Receivables turnover: This ratio reflects how quickly a company collects cash from its credit sales. Becton Dickinson's receivables turnover has been consistently healthy, ranging from 6.70 to 8.61 over the past five years. A higher turnover indicates that the company efficiently collects payment from its customers.

- Payables turnover: The payables turnover ratio shows how efficiently a company pays its suppliers. Becton Dickinson's payables turnover has generally been increasing over the years, ranging from 6.27 to 11.14. A higher turnover suggests the company is paying its suppliers more quickly, which can improve relationships and potentially lead to discounts.

- Working capital turnover: This ratio measures how efficiently a company utilizes its working capital to generate sales. Becton Dickinson's working capital turnover has shown significant fluctuations over the past five years, with a peak in 2022 at 57.18. A higher turnover indicates that the company is generating more sales relative to its working capital investment.

Overall, Becton Dickinson's activity ratios demonstrate a good level of efficiency in managing its inventory, receivables, payables, and working capital. The company's ability to maintain stable or improving turnover ratios indicates effective management of its resources to support its operations and financial performance.

Average number of days

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Days of inventory on hand (DOH)	days	78.79	65.36	70.66	58.58	117.83
Days of sales outstanding (DSO)	days	54.86	47.74	42.38	47.64	54.45
Number of days of payables	days	38.87	32.77	37.23	37.14	58.21

Becton Dickinson and Company's activity ratios exhibit fluctuations over the years.

1. Days of Inventory on Hand (DOH):
- The company's DOH has seen variations, ranging from 58.58 days in 2021 to 117.83 days in 2020.
- The high DOH in 2020 suggests a slower inventory turnover, which may indicate excess inventory or difficulties in selling products efficiently.
- The subsequent decrease to 58.58 days in 2021 reflects an improvement in managing inventory levels, possibly through better demand forecasting or inventory control.
- However, the DOH increased again to 78.79 days in 2024, indicating a potential slowdown in inventory turnover.

2. Days of Sales Outstanding (DSO):
- The DSO has shown fluctuations as well, with the lowest being 42.38 days in 2022 and the highest at 54.86 days in 2024.
- A decreasing trend in DSO generally indicates faster sales collection, potentially improving the company's cash flow and liquidity.
- The increase in DSO in 2024 may imply a delay in collecting sales revenue, which could impact the company's working capital management.

3. Number of Days of Payables:
- Becton Dickinson's days of payables also fluctuated over the years.
- A shorter payable period can indicate a more advantageous position for the company as it can hold onto cash longer.
- The gradual decrease in days of payables from 58.21 days in 2020 to 38.87 days in 2024 may signify a more proactive approach to managing payables, which could be beneficial for cash management.

In conclusion, Becton Dickinson and Company's activity ratios demonstrate varying trends, reflecting changes in inventory management, sales collection efficiency, and accounts payables handling over the years. Monitoring and analyzing these ratios can provide insights into the company's operational performance and financial health.

Long-term

	Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Fixed asset turnover	2.96	2.95	3.14	3.19	2.71
Total asset turnover	0.35	0.37	0.36	0.36	0.30

The fixed asset turnover ratio for Becton Dickinson and Company has shown relatively stable performance over the past five years, ranging between 2.71 and 3.19. This indicates that the company has been efficient in generating sales revenue in relation to its investment in fixed assets, with a slight decrease in 2020 followed by a gradual recovery in the subsequent years.

On the other hand, the total asset turnover ratio has fluctuated within a narrower range, from 0.30 to 0.37, suggesting that the company's overall efficiency in generating sales from its total assets has been relatively consistent over the period. The decrease in 2020 followed by a subsequent recovery in the ratio indicates potential changes in the company's asset utilization efficiency during that period.

Overall, while the fixed asset turnover ratio reflects Becton Dickinson's effectiveness in utilizing its fixed assets to generate revenue, the total asset turnover ratio provides a broader perspective on the company's overall asset utilization efficiency. It is essential to examine these ratios in conjunction with other financial metrics and industry benchmarks to gain a comprehensive understanding of the company's long-term activity performance.