Bio-Rad Laboratories Inc (BIO)

Short-term

Turnover ratios

The activity ratios of Bio-Rad Laboratories Inc. provide insight into how efficiently the company manages its inventory, receivables, payables, and working capital.

1. Inventory turnover:
The inventory turnover ratio measures how many times during the period the company sells and replaces its inventory. A declining trend in the inventory turnover ratio from 2019 to 2023 indicates that Bio-Rad Laboratories Inc. is holding onto its inventory for longer periods before selling it, which may suggest issues with sales or production efficiency.

2. Receivables turnover:
The receivables turnover ratio indicates how efficiently the company collects on its credit sales. Bio-Rad Laboratories Inc. has shown a consistent decline in this ratio from 2019 to 2023, which could imply that the company is taking longer to collect payments from its customers, potentially leading to cash flow challenges.

3. Payables turnover:
The payables turnover ratio reflects how quickly the company pays its suppliers. A decreasing trend in the payables turnover ratio suggests that Bio-Rad Laboratories Inc. is taking longer to settle its payables with suppliers, which could impact relationships or indicate liquidity issues.

4. Working capital turnover:
The working capital turnover ratio measures how efficiently the company generates revenue based on its working capital. The fluctuation in this ratio over the years may indicate variations in the company's ability to convert working capital into sales. A decrease in this ratio from 2021 to 2023 could signify a potential decrease in operational efficiency or revenue generation.

Overall, these activity ratios suggest that Bio-Rad Laboratories Inc. may be experiencing challenges in managing its inventory levels, accounts receivable collection, payables settlement, and working capital utilization, which could impact its overall financial performance and operational efficiency.

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Average number of days

Activity ratios provide insights into how efficiently a company manages its assets and liabilities to generate sales and cash flows. Let's analyze Bio-Rad Laboratories Inc.'s activity ratios based on the provided data.

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows an increasing number of days from 2019 to 2023, indicating that Bio-Rad is holding inventory for a longer period.
- A high DOH could suggest overstocking or slow-moving inventory, which ties up capital and may lead to obsolescence or storage costs.
- Management should focus on optimizing inventory levels to improve working capital efficiency and reduce carrying costs.

2. Days of Sales Outstanding (DSO):
- DSO measures how efficiently a company collects its accounts receivable. A lower number of days is favorable.
- Bio-Rad's DSO has fluctuated slightly over the years but has generally been in the range of 52-66 days.
- While the DSO is within a reasonable range, any further reduction in DSO could enhance cash flows and liquidity for the company.

3. Number of Days of Payables:
- Days of payables indicate how long a company takes to pay its suppliers.
- Bio-Rad's days of payables have varied but remained relatively stable around 40 days.
- Maintaining a balance between maximizing payment terms with suppliers and preserving good relationships is crucial for liquidity management.

Overall, Bio-Rad Laboratories Inc. should focus on optimizing its inventory levels, improving accounts receivable collection efficiency, and managing payables effectively to enhance working capital, cash flow, and overall operational performance. Periodic review and adjustments in these areas can lead to improved financial health and competitiveness in the industry.

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Long-term

Bio-Rad Laboratories Inc.'s long-term activity ratios reflect the efficiency of the company in utilizing its fixed and total assets to generate sales over the past five years.

The fixed asset turnover ratio has been fluctuating over the period, ranging from 4.63 in 2019 to 5.95 in 2021. This ratio indicates that Bio-Rad Laboratories has been effective in utilizing its fixed assets to generate sales, with a higher ratio suggesting better efficiency in generating sales from its investments in property, plant, and equipment.

On the other hand, the total asset turnover ratio has shown a less consistent trend, with a low of 0.16 in 2021 and a high of 0.29 in 2019. This ratio indicates the company's ability to generate sales from its total assets, including both fixed and current assets. A higher total asset turnover ratio signifies a more efficient use of all assets to generate revenue.

Overall, Bio-Rad Laboratories has generally maintained strong efficiency in generating sales from its fixed assets, as indicated by the relatively high fixed asset turnover ratios in recent years. However, the fluctuation in the total asset turnover ratio suggests some variability in the company's overall asset utilization efficiency. Further analysis of the company's asset management practices and business operations could provide insights into the factors driving these trends.