Charles River Laboratories (CRL)

Short-term

Turnover ratios

Charles River Laboratories' activity ratios provide insights into how efficiently the company manages its working capital and operations. Here is a detailed analysis of each activity ratio based on the provided data:

1. Inventory Turnover:
- The inventory turnover ratio indicates how many times a company sells and replaces its inventory during a specific period.
- Charles River Laboratories' inventory turnover has fluctuated over the years, with a high of 4.73 in 2024 and a low of 2.53 in 2023.
- An increasing trend in inventory turnover, as seen from 2020 to 2024, suggests that the company is managing its inventory more efficiently.

2. Receivables Turnover:
- The receivables turnover ratio measures how effectively a company collects payments from its customers.
- Charles River Laboratories' receivables turnover has shown a generally increasing trend over the years, reaching a value of 5.72 in 2024.
- A higher receivables turnover ratio indicates that the company is collecting payments from customers more quickly.

3. Payables Turnover:
- The payables turnover ratio assesses how efficiently a company pays its suppliers.
- Charles River Laboratories' payables turnover ratio has varied significantly, with a notable increase to 9.38 in 2024 from 3.83 in 2021.
- A higher payables turnover ratio suggests that the company is managing its payables effectively and possibly taking advantage of favorable credit terms.

4. Working Capital Turnover:
- The working capital turnover ratio evaluates how well a company generates revenue relative to its working capital.
- Charles River Laboratories' working capital turnover has fluctuated, with a peak of 14.35 in 2021 and a low of 7.38 in 2023.
- A higher working capital turnover ratio indicates that the company is efficiently utilizing its working capital to generate sales.

In summary, Charles River Laboratories has demonstrated improvements in inventory turnover, receivables turnover, and payables turnover over the years. The working capital turnover ratio has shown variability but generally indicates efficient use of working capital to drive revenue generation. These trends suggest that the company is effectively managing its assets and liabilities to support its business operations.

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Average number of days

The activity ratios of Charles River Laboratories provide insights into the efficiency of the company's operations and management of its working capital.

1. Days of Inventory on Hand (DOH): The company's DOH has fluctuated over the years, ranging from a high of 144.22 days in December 2023 to a low of 77.23 days in December 2024. A higher DOH indicates that the company is holding on to its inventory for a longer period, which may tie up capital and increase carrying costs. Conversely, a lower DOH suggests better inventory management and potentially faster turnover.

2. Days of Sales Outstanding (DSO): Charles River Laboratories has managed to maintain a relatively stable DSO over the years, with a decrease from 76.70 days in December 2020 to 63.86 days in December 2024. A lower DSO indicates that the company is collecting its receivables more quickly, which is a positive sign of efficient credit management and cash flow generation.

3. Number of Days of Payables: The number of days of payables has shown variability across the years, with a significant decrease from 95.24 days in December 2021 to 38.91 days in December 2024. A lower number of days of payables suggests that the company is paying its suppliers more quickly, which could potentially strain cash flows. However, it may also indicate stronger bargaining power with suppliers.

Overall, analyzing these activity ratios together provides a comprehensive view of how Charles River Laboratories manages its inventory, accounts receivable, and accounts payable, which are crucial aspects of its working capital management and operational efficiency.

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Long-term

Based on the provided data on Charles River Laboratories' long-term activity ratios, we can analyze the fixed asset turnover and total asset turnover ratios for the years from December 31, 2020, to December 31, 2024.

1. Fixed Asset Turnover:
- The fixed asset turnover measures how efficiently the company is using its fixed assets to generate revenue.
- The trend shows an improvement in the fixed asset turnover ratio from 2.61 in 2020 to 2.57 in 2024.
- The increase in the fixed asset turnover ratio indicates that Charles River Laboratories is generating more revenue per dollar of fixed assets invested over the years.
- This improvement suggests that the company's fixed assets are being utilized more effectively to generate sales.

2. Total Asset Turnover:
- The total asset turnover ratio reflects how efficiently the company is using all its assets (both fixed and current) to generate sales.
- The trend in the total asset turnover ratio fluctuates slightly, with a decrease from 0.54 in 2020 to 0.50 in 2023 and an increase to 0.55 in 2024.
- The overall efficiency in utilizing total assets seems to have varied during the period under review.
- The increase in 2024 suggests that Charles River Laboratories has improved its ability to generate sales relative to its total asset base compared to the previous periods, indicating potential efficiency gains or improved operational performance.

In summary, the fixed asset turnover ratio indicates consistent improvement over the years, implying better utilization of fixed assets for revenue generation. On the other hand, the total asset turnover ratio shows some fluctuations but demonstrates an upward trend by the end of the period, indicating an overall improvement in the company's efficiency in generating sales relative to its total asset base.