Cardinal Health Inc (CAH)

Short-term

Turnover ratios

The activity ratios of Cardinal Health Inc. provide insights into the company’s operational efficiency concerning inventory management, receivables collection, payables management, and working capital utilization over the specified periods.

Inventory Turnover:
The inventory turnover ratio exhibits a steady upward trend from 10.67 times in fiscal year 2021 to 14.67 times in fiscal year 2024. This increase indicates that the company has become more efficient in managing and selling its inventory, reducing inventory holding periods and potentially lowering storage costs. However, there is a slight decline to 12.74 times in fiscal year 2025, which may suggest a moderate slowdown in inventory turnover or changes in inventory policies.

Receivables Turnover:
Receivables turnover demonstrates relatively stable performance, remaining within a narrow range from 17.85 in 2021 to 16.81 in 2025. The ratio peaks at 18.46 in 2023, indicating efficient collection of accounts receivable during that period. The slight decline thereafter could suggest marginally lengthened collection times or changes in credit policies, but overall, the receivables management remains efficient.

Payables Turnover:
The payables turnover ratio shows minor fluctuations within a narrow band, from 6.57 in 2021 to 6.18 in 2025. This indicates a consistent approach toward settling obligations with suppliers. The decreasing trend in 2025 might reflect a slight lengthening of payment periods, possibly tied to strategic cash flow management or supplier negotiation terms.

Working Capital Turnover:
The data for working capital turnover is available only for 2021 and 2022, with figures of 47.45 and 76.04, respectively. The notable jump suggests a significant improvement in the efficiency of utilizing working capital to generate sales or revenue during this period. The absence of data beyond 2022 limits further analysis, but the available figures imply enhanced operational efficiency in managing short-term assets relative to sales.

In summary, Cardinal Health Inc. has shown improvements in key activity ratios, especially in inventory management and working capital utilization, indicating enhanced operational efficiency. Receivables and payables turnover ratios remain relatively stable, reflecting consistent receivables collection and payables management practices. The trends suggest a focus on optimizing inventory levels and working capital while maintaining stable credit and payment policies.

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Average number of days

The analysis of Cardinal Health Inc.'s activity ratios over the period from June 30, 2021, to June 30, 2025, reveals several key trends in inventory management, receivables collection, and payables payments.

Days of Inventory on Hand (DOH):
The data indicates a consistent decrease in the number of days inventory is held, from 34.21 days in 2021 to 24.88 days in 2024, reflecting improved inventory turnover. This reduction suggests enhanced inventory management efficiency, possibly due to better demand forecasting or streamlined supply chain operations. However, a slight increase to 28.65 days in 2025 may imply a temporary accumulation of inventory or adjustments in inventory policies.

Days of Sales Outstanding (DSO):
The receivables collection period remained relatively stable over the analyzed years, with minor fluctuations. It decreased from 20.45 days in 2021 to 19.78 days in 2023, indicating effective receivables management and prompt collection practices. Slight increases to 19.45 days in 2024 and 21.72 days in 2025 could suggest a marginal loosening of credit terms or increased receivables, which warrants monitoring to ensure cash flow stability.

Number of Days of Payables:
The number of days payable fluctuated within a relatively narrow range. It slightly decreased from 55.56 days in 2021 to 52.83 days in 2024, then increased to 59.09 days in 2025. The trend reflects a tendency to extend payment periods, potentially to improve cash reserves. The increase in 2025 may indicate a strategic move to delay payments or could be a response to supplier negotiations, impacting working capital efficiency.

Overall, the activity ratios showcase a pattern of operational improvements with increasing efficiency in inventory turnover and stable receivables management. The variation in payables indicates strategic liquidity management, with a recent extension in payment days in 2025. Continuous monitoring of these ratios is essential to sustain operational efficiency and liquidity health.

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Long-term

The analysis of Cardinal Health Inc.’s long-term activity ratios reveals several noteworthy trends over the periods from June 30, 2021, through June 30, 2024, based on the provided data.

The fixed asset turnover ratio indicates a consistent increase from 68.84 in 2021 to a peak of 83.27 in 2023. This upward trend suggests an improved efficiency in utilizing fixed assets to generate sales during this period. The ratio's rise implies that the company has been more effectively leveraging its property, plant, and equipment (PP&E), possibly through better asset management, increased sales relative to fixed assets, or both. However, a slight decline to 75.51 in June 2024 signifies a potential slowdown or slight reduction in asset utilization efficiency, although the ratio remains substantially higher than the 2021 figure.

Similarly, the total asset turnover ratio shows a steady increase from 3.65 in 2021 to 4.73 in 2023, indicating enhanced overall asset efficiency in generating sales. The improvement suggests that the company has been capable of producing higher sales relative to its total assets, reflecting effective asset management and operational efficiency. In 2024, the ratio further increases to 5.03 before decreasing to 4.19 in 2025. The decline in 2025, relative to the previous period, could signify a reduction in overall asset productivity, possibly due to increased asset base without a proportionate increase in sales or operational adjustments.

In summary, Cardinal Health Inc. demonstrated significant improvements in asset utilization efficiency from 2021 through 2023, with both fixed asset and total asset turnover ratios trending upward. The slight downturn observed in 2024 and 2025 warrants further analysis to understand potential causes such as changes in operational practices, asset base adjustments, or external market factors impacting asset productivity. Overall, the company's ability to generate sales from its assets has improved over the analyzed period, albeit with some fluctuations in the most recent years.