Biogen Inc (BIIB)

Working capital turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Revenue	US$ in thousands	9,675,900	9,835,600	10,173,400	10,981,700	13,444,600
Total current assets	US$ in thousands	7,456,800	6,859,300	9,791,200	7,856,500	6,887,100
Total current liabilities	US$ in thousands	5,528,800	3,434,300	3,272,800	4,298,200	3,742,200
Working capital turnover		5.02	2.87	1.56	3.09	4.28

December 31, 2024 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $9,675,900K ÷ ($7,456,800K – $5,528,800K)
= 5.02

The working capital turnover ratio measures a company's ability to efficiently use its working capital to generate sales revenue. In the case of Biogen Inc, the working capital turnover has fluctuated over the past five years.

In December 2020, the working capital turnover ratio was 4.28, indicating that Biogen generated $4.28 in sales for every dollar of working capital invested. This suggests a high level of efficiency in utilizing its working capital.

However, by December 2022, the ratio had decreased significantly to 1.56, indicating a decline in the company's ability to convert working capital into sales revenue efficiently. This could be a red flag as it may indicate inefficiencies or difficulties in managing working capital during that period.

The ratio recovered in December 2023 to 2.87, showing an improvement in the utilization of working capital to generate sales. By December 2024, Biogen significantly improved its efficiency with a working capital turnover ratio of 5.02, surpassing the ratio in 2020, signaling a strong performance in converting working capital into sales revenue.

Overall, Biogen Inc has shown varying levels of efficiency in using its working capital over the years, with improvements in recent periods. The company's ability to manage and utilize working capital effectively plays a crucial role in its financial performance and operational efficiency.