Quest Diagnostics Incorporated (DGX)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 35.26 | 32.63 | 33.59 | 31.63 | 26.03 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 44.27 | 16.61 | 28.48 | 10.92 | 7.36 |
Quest Diagnostics Incorporated has shown a consistent improvement in its inventory turnover over the years, indicating its ability to efficiently manage its inventory. The inventory turnover ratio has increased from 26.03 in 2020 to 35.26 in 2024, indicating that Quest Diagnostics is selling its inventory more frequently each year.
On the other hand, the receivables turnover ratio is not provided, which makes it difficult to assess how quickly the company is collecting its accounts receivable. Without this information, it is challenging to gauge the efficiency of Quest Diagnostics in converting credit sales into cash.
Similarly, details for the payables turnover ratio are not available, making it impossible to determine how quickly the company is paying its suppliers.
In terms of working capital turnover, Quest Diagnostics has shown a significant improvement in utilizing its working capital efficiently over the years. The working capital turnover has increased from 7.36 in 2020 to 44.27 in 2024, indicating that the company generates more revenue relative to its working capital investment.
Overall, Quest Diagnostics' strong inventory turnover and working capital turnover ratios suggest effective management of its resources, although further insights could be gained by examining its receivables and payables turnover ratios.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 10.35 | 11.19 | 10.87 | 11.54 | 14.02 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Quest Diagnostics Incorporated has shown improvement in its Days of Inventory on Hand (DOH) ratio over the years, decreasing from 14.02 days in 2020 to 10.35 days in 2024. This indicates that the company is managing its inventory efficiently, holding less inventory on hand relative to its sales.
The Days of Sales Outstanding (DSO) and Number of Days of Payables ratios are not provided in the data, which makes it difficult to assess the efficiency of Quest Diagnostics in collecting receivables and managing its payables.
In conclusion, based on the available data, Quest Diagnostics has effectively reduced its inventory holding period, which suggests good inventory management practices. However, a complete analysis of activity ratios would require information on DSO and payables turnover to provide a comprehensive view of the company's efficiency in managing its working capital cycle.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 4.20 | 4.68 | 5.80 |
| Total asset turnover | 0.61 | 0.66 | 0.77 | 0.79 | 0.67 |
The Fixed Asset Turnover ratio measures how effectively a company is utilizing its fixed assets to generate revenue. A higher ratio indicates better efficiency in generating sales from investments in property, plant, and equipment.
From the data provided for Quest Diagnostics Incorporated, we see a decreasing trend in the Fixed Asset Turnover ratio over the years. In 2020, the ratio was 5.80, indicating that the company generated $5.80 in sales for every dollar invested in fixed assets. However, this ratio decreased to 4.68 in 2021 and further declined to 4.20 in 2022. There is missing data for 2023 and 2024.
This declining trend may suggest that Quest Diagnostics Incorporated is becoming less efficient in generating sales from its fixed assets over time. It could indicate that the company's fixed assets are not being utilized as effectively as before, which may require further investigation into the company's asset management efficiency.
Total Asset Turnover ratio, on the other hand, measures the efficiency of the company in generating sales from all its assets, including fixed and current assets. A higher ratio signifies better efficiency in utilizing all assets to drive revenue.
Looking at the Total Asset Turnover ratio for Quest Diagnostics Incorporated, we observe fluctuations over the years. In 2020, the ratio was 0.67, indicating that the company generated $0.67 in sales for every dollar of total assets. The ratio increased to 0.79 in 2021, then decreased to 0.77 in 2022, and further dropped to 0.66 in 2023, and 0.61 in 2024.
The decreasing trend in Total Asset Turnover ratio suggests that Quest Diagnostics Incorporated may be experiencing challenges in efficiently utilizing all its assets to drive sales growth. It may signal that the company needs to improve its overall asset management strategies to enhance its revenue generation efficiency in the future.