Bristol-Myers Squibb Company (BMY)

Short-term

Turnover ratios

Activity ratios provide insights into how effectively a company is managing its assets and liabilities to generate sales. Let's analyze Bristol-Myers Squibb Co.'s activity ratios:

1. Inventory Turnover: The inventory turnover ratio measures how many times a company sells and replaces its inventory during a period. Bristol-Myers Squibb Co. has shown a declining trend in inventory turnover from 1.88 in 2019 to 4.02 in 2023, indicating a slower movement of inventory in recent years. This may suggest potential issues with inventory management efficiency.

2. Receivables Turnover: This ratio indicates how efficiently a company collects cash from its credit sales. Bristol-Myers Squibb Co. has maintained a relatively stable receivables turnover ratio over the years, ranging from 3.40 in 2019 to 4.67 in 2022. A higher turnover ratio is favorable as it implies quicker collection of receivables.

3. Payables Turnover: The payables turnover ratio reflects how many times a company pays off its accounts payable during a period. Bristol-Myers Squibb Co. has shown a fluctuating trend in payables turnover, with a decrease from 3.30 in 2019 to 3.28 in 2023. A lower turnover indicates a longer payment cycle, which could indicate potential issues with managing trade payables efficiently.

4. Working Capital Turnover: This ratio indicates how efficiently a company utilizes its working capital to generate sales. Bristol-Myers Squibb Co. has shown fluctuations in its working capital turnover over the years, peaking at 8.57 in 2022. A higher turnover ratio suggests better utilization of working capital to generate revenue.

In summary, while the company's receivables turnover has been relatively steady, there are concerns regarding the declining inventory turnover and fluctuating payables turnover. The working capital turnover improved significantly in 2022, indicating enhanced efficiency in utilizing working capital. Overall, Bristol-Myers Squibb Co. may benefit from addressing inventory management issues and ensuring consistency in payables turnover to enhance its operational efficiency.

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Average number of days

Activity ratios are used to assess how efficiently a company manages its assets and liabilities to generate revenue. Let's analyze Bristol-Myers Squibb Co.'s activity ratios based on the provided data:

1. Days of Inventory on Hand (DOH):
- The trend indicates an increase in the number of days inventory is held over the years.
- In 2023, the DOH was at 90.87 days, showing an increase from 84.22 days in 2022.
- A higher DOH could signify slower inventory turnover, potentially tying up working capital and indicating inefficiencies in managing inventory.

2. Days of Sales Outstanding (DSO):
- The DSO measures how long it takes a company to collect revenue after making a sale.
- Bristol-Myers Squibb Co.'s DSO has seen fluctuations over the years, with an increase in 2023 to 88.57 days from 78.17 days in 2022.
- An increasing DSO could indicate a delay in receiving payment from customers, impacting cash flow and liquidity.

3. Number of Days of Payables:
- The days of payables represent how long it takes a company to pay its suppliers.
- Bristol-Myers Squibb Co. has shown varying trends in the number of days payables over the years, with an increase in 2023 to 111.24 days from 109.46 days in 2022.
- A longer period of payables may indicate favorable credit terms with suppliers, but it could also suggest potential liquidity concerns if payments are delayed excessively.

In conclusion, Bristol-Myers Squibb Co. should closely monitor its activity ratios to ensure efficient management of inventory, timely collection of receivables, and effective payment of payables to support sustainable operations and financial health.

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See also:

Bristol-Myers Squibb Company Short-term (Operating) Activity Ratios

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Long-term

The long-term activity ratios of Bristol-Myers Squibb Co. provide insights into how efficiently the company is utilizing its assets to generate sales over the years.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how effectively the company utilizes its fixed assets to generate revenue. A higher ratio indicates more efficient utilization of fixed assets.
- Bristol-Myers Squibb Co. had a decreasing trend in fixed asset turnover from 2019 to 2022, indicating a slight decline in the efficiency of using fixed assets to generate sales during those years.
- However, in 2023, there was a slight improvement in the fixed asset turnover ratio, which may suggest better asset utilization or increased revenue generation from fixed assets.

2. Total Asset Turnover:
- The total asset turnover ratio measures how efficiently the company uses all its assets to generate sales. A higher ratio signifies better utilization of assets to generate revenue.
- Bristol-Myers Squibb Co. showed an increasing trend in total asset turnover from 2019 to 2022, indicating improved efficiency in using total assets to generate sales.
- The significant increase in the total asset turnover ratio from 2019 to 2022 suggests that the company managed to generate more revenue for every dollar of assets held during these years.
- However, in 2023, there was a slight decrease in the total asset turnover ratio, which might indicate a potential decrease in the efficiency of asset utilization compared to the previous year.

Overall, while the fixed asset turnover ratios fluctuated over the years, the total asset turnover ratio of Bristol-Myers Squibb Co. showed an improving trend until 2022, suggesting enhanced efficiency in utilizing total assets to generate sales. The slight decline in total asset turnover in 2023 should be further examined to understand its implications on the company's long-term asset management and revenue generation strategies.

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See also:

Bristol-Myers Squibb Company Long-term (Investment) Activity Ratios