Cardinal Health Inc (CAH)

Short-term

Turnover ratios

Cardinal Health Inc's inventory turnover has seen a consistent improvement over the last five years, increasing from 11.07 in 2020 to 14.67 in 2024. This indicates that the company is more efficient in managing its inventory levels and converting inventory into sales.

Similarly, the receivables turnover ratio has also shown a steady increase over the five-year period, indicating that the company is collecting its accounts receivable more efficiently. The ratio improved from 18.50 in 2020 to 18.77 in 2024.

On the other hand, the payables turnover ratio has fluctuated slightly over the past five years but has remained relatively stable. The ratio of 6.91 in 2024 suggests that Cardinal Health Inc takes approximately 6.91 times to pay off its accounts payable in a year.

The working capital turnover ratio indicates how efficiently the company is utilizing working capital to generate sales. Although not available for 2020 and 2021, there is a significant decrease in the working capital turnover from 76.04 in 2022 to 47.45 in 2023, suggesting a fluctuation in the company's working capital management efficiency.

Overall, Cardinal Health Inc has shown improvements in its inventory turnover and receivables turnover ratios, indicating better inventory management and accounts receivable collection practices. The stable payables turnover ratio suggests consistent payment practices. However, the decrease in the working capital turnover ratio in 2023 may warrant further investigation into the company's working capital management strategies.

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Average number of days

Days of inventory on hand (DOH) measures how many days, on average, it takes for Cardinal Health to sell its inventory. A lower DOH indicates that the company is managing its inventory efficiently. Over the past five years, Cardinal Health has shown a decreasing trend in its DOH, which is positive as it implies better inventory management.

Days of sales outstanding (DSO) reflects the average number of days it takes for the company to collect its accounts receivable. A lower DSO indicates a faster collection process, which is favorable. Cardinal Health has maintained a relatively stable DSO over the years, with a slight decrease in the most recent year.

Number of days of payables measures how long Cardinal Health takes to pay its suppliers. A higher number of days of payables indicates that the company is taking longer to pay its bills, allowing for better cash flow management. Cardinal Health has shown a slight increase in its days of payables over the past five years, suggesting that the company is taking longer to settle its payables.

Overall, the activity ratios of Cardinal Health indicate that the company has improved its inventory management efficiency, maintained stable accounts receivable collection periods, and slightly extended its days of payables over the past five years. These trends suggest that Cardinal Health is effectively managing its working capital and operating activities.

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Long-term

Cardinal Health Inc's long-term activity ratios, specifically the fixed asset turnover and total asset turnover ratios, have shown a consistent improvement over the past five years.

The fixed asset turnover ratio, which measures how efficiently the company is utilizing its fixed assets to generate revenue, has steadily increased from 64.63 in 2020 to 89.69 in 2024. This indicates that Cardinal Health has been able to generate more revenue for each dollar invested in fixed assets, reflecting improved asset utilization efficiency over the years.

Similarly, the total asset turnover ratio, which assesses the company's ability to generate sales from its total assets, has also shown an upward trend. The ratio has increased from 3.75 in 2020 to 5.03 in 2024, indicating that Cardinal Health has become more efficient in utilizing its total assets to generate revenue over the years.

Overall, the improving trend in both fixed asset turnover and total asset turnover ratios suggests that Cardinal Health has been effectively managing its assets to drive sales growth and maximize operational efficiency.