Catalent Inc (CTLT)

Short-term

Turnover ratios

Catalent Inc's activity ratios provide valuable insights into the company's efficiency in managing its operations and resources.

1. Inventory Turnover:
- The inventory turnover ratio has been fluctuating over the past five years, indicating changes in the company's ability to quickly sell its inventory.
- The ratio has generally been within a moderate range, with a peak in 2020 and a slight decline in 2023.

2. Receivables Turnover:
- Catalent Inc has shown consistent performance in collecting its receivables, as evidenced by the stable and relatively high receivables turnover ratios over the years.
- The company is efficient in converting its credit sales into cash, with a notable improvement in 2024 compared to the previous years.

3. Payables Turnover:
- The payables turnover ratio reflects the speed at which Catalent Inc pays its suppliers.
- The company has demonstrated an increasing trend in paying its creditors, with a notable improvement in the payables turnover ratio over the years.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently the company generates revenue from its working capital.
- Catalent Inc has shown variations in utilizing its working capital effectively, with a significant decrease in the ratio in 2022 followed by an increase in subsequent years.

Overall, Catalent Inc's activity ratios indicate a mixed performance in managing its inventory, receivables, payables, and working capital. The company has demonstrated strengths in collecting receivables and managing payables efficiently, while the inventory management and working capital utilization show some room for improvement.

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Average number of days

The activity ratios of Catalent Inc indicate how efficiently the company manages its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH): Catalent Inc has shown a trend of fluctuating DOH over the past five years, ranging from a low of 56.02 days in 2020 to a high of 87.99 days in 2023. A decrease in DOH signifies better inventory management, while an increase indicates potential issues with inventory turnover efficiency. The company managed to lower its DOH significantly in 2024 compared to the previous year, which could indicate improved inventory control.

2. Days of Sales Outstanding (DSO): The DSO ratio reflects the average number of days it takes for the company to collect its accounts receivable. Catalent Inc's DSO has also varied over the years, with a high of 98.87 days in 2020 and a low of 76.73 days in 2024. A decreasing trend in DSO is generally positive, as it indicates the company is collecting revenue more quickly. Catalent Inc has made progress in reducing its DSO, which could imply improved credit policies and collection procedures.

3. Number of Days of Payables: The number of days of payables indicates how quickly a company pays its suppliers. Catalent Inc has managed to reduce its payables days from 55.50 days in 2020 to 38.44 days in 2024. A lower number of days of payables suggests that the company is paying its obligations more promptly. However, it's essential to strike a balance between paying suppliers quickly and managing cash flow effectively.

In conclusion, Catalent Inc has shown improvements in its activity ratios, particularly in managing inventory and collecting receivables more efficiently. The company's ability to optimize these key aspects of its operations bodes well for its overall financial health and operational effectiveness.

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Long-term

The fixed asset turnover ratio for Catalent Inc has been fluctuating over the past five years, ranging from 1.16 to 1.63. This ratio indicates the company's efficiency in generating sales from its fixed assets. A higher fixed asset turnover ratio is generally preferred as it suggests that the company is utilizing its fixed assets more effectively to generate revenue.

On the other hand, the total asset turnover ratio has also shown variation over the same period, with values between 0.40 and 0.46. This ratio reflects the company's overall efficiency in using its total assets to generate sales. A higher total asset turnover ratio indicates that the company is efficiently generating revenue from its total asset base.

Based on the trends observed in the fixed asset turnover and total asset turnover ratios, Catalent Inc seems to have experienced some fluctuations in asset efficiency over the years. Further analysis and comparison with industry benchmarks may be necessary to determine the underlying reasons for these fluctuations and evaluate the company's performance in utilizing its assets for revenue generation.