Charles River Laboratories (CRL)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.53 | 3.23 | 3.81 | 3.57 | 3.91 |
| Receivables turnover | 5.23 | 5.45 | 5.32 | 4.76 | 5.02 |
| Payables turnover | 5.70 | 4.02 | 3.83 | 5.41 | 5.63 |
| Working capital turnover | 7.38 | 11.79 | 14.35 | 8.13 | 8.30 |
1. Inventory Turnover:
- Charles River Laboratories' inventory turnover has decreased over the past five years, indicating that the company is selling its inventory at a slower rate. This may suggest potential issues related to inventory management or demand for its products.
2. Receivables Turnover:
- The company's receivables turnover has shown some fluctuations but generally remained stable over the period. This indicates that Charles River Laboratories is efficient in collecting payments from its customers, with a slight improvement in 2023 compared to 2022.
3. Payables Turnover:
- The payables turnover ratio has varied significantly over the years, with a notable increase in 2023. A higher payables turnover ratio suggests that the company is paying its suppliers more quickly, which could indicate effective management of accounts payable.
4. Working Capital Turnover:
- Charles River Laboratories' working capital turnover has also experienced fluctuations, with a notable decrease in 2023 compared to the previous year. A lower working capital turnover may indicate inefficiencies in managing the company's working capital to generate sales.
Overall, while the company has shown strengths in managing receivables and payables turnover, there are potential areas of improvement in inventory turnover and working capital turnover that could be further analyzed to enhance operational efficiency and financial performance.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 144.22 | 112.87 | 95.73 | 102.25 | 93.45 |
| Days of sales outstanding (DSO) | days | 69.76 | 67.01 | 68.66 | 76.70 | 72.66 |
| Number of days of payables | days | 64.07 | 90.86 | 95.24 | 67.44 | 64.85 |
The Days of Inventory on Hand (DOH) for Charles River Laboratories have been increasing over the past five years, indicating that the company is holding inventory for longer periods. This could be a sign of inefficiency in inventory management or a decrease in the demand for their products.
On the other hand, the Days of Sales Outstanding (DSO) have fluctuated slightly over the years but generally remained stable. This indicates that the company is collecting its accounts receivable in a reasonable amount of time, with a slight improvement in collection efficiency in recent years.
The Number of Days of Payables has also shown some variation over the years. A lower number of days of payables suggests that the company is paying its suppliers more quickly, which could be beneficial for maintaining good relationships with them. However, a longer number of days of payables could indicate that the company is conserving cash or facing financial constraints.
Overall, the trends in these activity ratios suggest that Charles River Laboratories may need to focus on optimizing its inventory management practices to reduce the Days of Inventory on Hand and potentially improve its cash flow and profitability. Furthermore, continued monitoring and management of the Days of Sales Outstanding and Number of Days of Payables are also important for maintaining a healthy working capital cycle.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.49 | 2.80 | 2.68 | 2.61 | 2.47 |
| Total asset turnover | 0.50 | 0.54 | 0.49 | 0.54 | 0.55 |
The fixed asset turnover ratio measures how effectively a company is utilizing its fixed assets to generate revenue. Charles River Laboratories' fixed asset turnover has shown a declining trend over the past five years, from 2.47 in 2019 to 2.49 in 2023. This indicates that the company's fixed assets are being less efficiently used to generate revenue in recent years.
In contrast, the total asset turnover ratio reflects how efficiently a company is utilizing all its assets to generate sales. Charles River Laboratories' total asset turnover also presents a fluctuating trend, with a decrease from 0.55 in 2019 to 0.50 in 2023. This indicates that the company's total assets are generating less revenue relative to their book value.
Overall, both the fixed asset turnover and total asset turnover ratios suggest that Charles River Laboratories may be facing challenges in optimizing the use of its assets to generate revenue efficiently. Further analysis of the company's operations and strategies may be required to address these declining activity ratios.