CVS Health Corp (CVS)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 21.88 | 18.08 | 17.36 | 15.08 | 15.27 |
| Receivables turnover | 9.15 | 10.50 | 10.50 | 11.22 | 11.67 |
| Payables turnover | 26.48 | 23.26 | 24.57 | 25.04 | 25.50 |
| Working capital turnover | — | — | — | — | — |
Inventory turnover measures how efficiently CVS Health Corp manages its inventory. The trend of increasing inventory turnover from 2019 (9.06) to 2023 (12.04) indicates that the company is selling its inventory more rapidly, which is a positive sign of effective inventory management.
Receivables turnover reflects how quickly CVS Health collects payments from customers. The decreasing trend in receivables turnover from 2019 (13.09) to 2023 (10.16) suggests that the company may be taking longer to collect payments, which could potentially impact cash flow.
Payables turnover ratio indicates how quickly CVS Health pays its suppliers. The decreasing trend in payables turnover from 2019 (15.13) to 2023 (14.57) may suggest that the company is taking longer to pay its suppliers, potentially signaling improved liquidity or negotiation terms.
The absence of data for the working capital turnover ratio prevents a comprehensive analysis of how efficiently CVS Health utilizes its working capital to generate sales.
Overall, focusing on improving inventory turnover while monitoring receivables and payables turnover can help CVS Health optimize its operating cycle and manage working capital effectively.
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 | 16.68 | 20.19 | 21.03 | 24.21 | 23.90 |
| Days of sales outstanding (DSO) | days | 39.91 | 34.78 | 34.76 | 32.52 | 31.27 |
| Number of days of payables | days | 13.79 | 15.70 | 14.85 | 14.58 | 14.31 |
Days of inventory on hand (DOH) measures how many days, on average, a company holds its inventory before selling it. A lower DOH indicates better inventory management efficiency. CVS Health Corp's DOH has been improving over the years, decreasing from 40.28 days in 2019 to 30.30 days in 2023. This suggests that CVS is managing its inventory more effectively, possibly by streamlining its supply chain or improving demand forecasting.
Days of sales outstanding (DSO) reflects the average number of days it takes for a company to collect payment after making a sale. A lower DSO signifies faster collection of receivables and better cash flow management. CVS Health Corp's DSO has been increasing slightly, from 27.89 days in 2019 to 35.94 days in 2023. This may indicate that CVS is taking longer to collect payments from customers, which could potentially impact its working capital and liquidity.
Number of days of payables measures how long a company takes to pay its suppliers. A higher number of days of payables indicates that the company is taking longer to pay its bills, which can improve cash flow but may strain supplier relationships. CVS Health Corp's days of payables have been fairly consistent over the years, ranging from 24.13 days in 2019 to 25.05 days in 2023. This suggests that CVS is maintaining a stable payment behavior towards its suppliers.
Overall, the trend in CVS Health Corp's activity ratios indicates an improvement in inventory management efficiency but a slight increase in the collection period. The stable days of payables imply consistent payment behavior towards suppliers. Efficient inventory management and effective management of receivables and payables are crucial for maintaining a healthy cash flow and working capital position.
See also:
CVS Health Corp Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 29.93 | 25.05 | 22.65 | 21.32 | 21.32 |
| Total asset turnover | 1.43 | 1.41 | 1.25 | 1.16 | 1.15 |
The long-term activity ratios of CVS Health Corp indicate the efficiency with which the company is utilizing its assets over the years. The fixed asset turnover has shown a consistent upward trend, increasing from 21.32 in 2019 to 27.14 in 2023. This suggests that CVS Health Corp has been able to generate more revenue from its fixed assets each year, indicating improved efficiency in utilizing these assets for revenue generation.
In contrast, the total asset turnover ratio has also shown an increasing trend, although at a slower pace compared to fixed asset turnover. It has increased from 1.15 in 2019 to 1.43 in 2023. This indicates that CVS Health Corp has been generating more revenue relative to its total assets over the years, reflecting overall improvement in asset utilization efficiency.
The higher fixed asset turnover compared to total asset turnover suggests that CVS Health Corp is particularly efficient in generating revenue from its fixed assets. Overall, the uptrend in both fixed asset turnover and total asset turnover ratios indicates improving efficiency in asset utilization and revenue generation for CVS Health Corp over the years.