Chemed Corp (CHE)

Short-term

Turnover ratios

Chemed Corp.'s activity ratios reflect its efficiency in managing various aspects of its operations. The inventory turnover has been consistently high, averaging around 125 over the past eight quarters, indicating that the company rapidly sells and replenishes its inventory. This suggests effective inventory management.

The receivables turnover ratio shows a fluctuating trend, ranging from 12 to 18 over the quarters. This indicates that the company collects its receivables from customers between 12 to 18 times a year on average. A higher ratio is generally preferred as it implies quicker collection of payments, although the trend in Chemed Corp.'s case suggests some variability in collection efficiency.

The payables turnover ratio has shown some variability as well, ranging from 17 to 35 over the same period. A higher ratio indicates that the company is taking longer to pay its suppliers, which can be beneficial for cash flow management. However, a significant increase in this ratio may also signify strained supplier relationships.

The working capital turnover ratio provides insight into how efficiently the company utilizes its working capital to generate sales revenue. While data is missing for Q1 2023, the available figures indicate a varying trend over the previous quarters, with values ranging from 12 to 63. A higher ratio suggests better working capital management, as the company is generating higher sales relative to its working capital.

Overall, Chemed Corp.'s activity ratios indicate a generally efficient operational performance, particularly in managing inventory turnover. However, the variability in receivables and payables turnover ratios suggests potential areas for improvement in managing collections and payment cycles.

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Average number of days

Chemed Corp.'s activity ratios provide insights into how efficiently the company manages its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH): Chemed Corp. has consistently maintained a relatively low DOH, ranging from 2.74 to 3.13 days over the past eight quarters. This suggests that the company is effectively managing its inventory levels and quickly turning over its inventory into sales.

2. Days of Sales Outstanding (DSO): The DSO for Chemed Corp. has varied between 20.08 and 29.26 days in the last two years. A lower DSO indicates that the company is collecting receivables quickly, which is beneficial for its cash flow. However, the fluctuations in DSO could imply changes in the company's credit policies or the payment behaviors of its customers.

3. Number of Days of Payables: Chemed Corp.'s days of payables range from 10.40 to 20.76 days across the quarters reviewed. A lower number of days of payables suggests that the company is paying its creditors more quickly. This can be advantageous for maintaining good relationships with suppliers but may also indicate potential cash flow challenges if payables are not managed effectively.

Overall, Chemed Corp.'s activity ratios indicate that the company efficiently manages its inventory, receivables, and payables. Monitoring these ratios over time can help assess the company's operational efficiency and cash flow management.

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Long-term

Chemed Corp.'s long-term activity ratios, represented by the fixed asset turnover and total asset turnover, provide insight into the company's efficiency in utilizing its assets to generate sales.

The fixed asset turnover ratio measures how efficiently the company is utilizing its fixed assets to generate revenue. Chemed Corp.'s fixed asset turnover has been relatively stable, ranging from 10.51 to 11.15 over the past eight quarters. This indicates that the company has been consistently generating revenue from its fixed assets, with a notable peak in Q2 2022 at 11.15.

On the other hand, the total asset turnover ratio reflects the overall efficiency of the company in generating sales from all its assets, including both fixed and current assets. Chemed Corp.'s total asset turnover has shown a decreasing trend, declining from 1.64 in Q1 2022 to 1.36 in Q4 2023. This suggests that the company may be experiencing challenges in effectively utilizing its total assets to generate revenue over the analyzed period.

In conclusion, while Chemed Corp. has demonstrated stable efficiency in generating revenue from its fixed assets, there appears to be a declining trend in its overall ability to generate sales from all its assets. Further analysis and examination of the company's asset management strategies may be warranted to address the decreasing trend in total asset turnover.