Danaher Corporation (DHR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 7.23 | 8.15 | 7.65 | 7.79 | 8.69 |
| Receivables turnover | 6.04 | 6.38 | 6.31 | 5.43 | 5.58 |
| Payables turnover | 10.62 | 9.81 | 8.24 | 8.72 | 9.34 |
| Working capital turnover | 4.18 | 4.19 | 8.33 | 3.43 | 0.86 |
Danaher Corp.'s activity ratios provide insight into the efficiency of the company's management of its inventory, receivables, payables, and working capital over a five-year period.
1. Inventory Turnover:
- Danaher's inventory turnover has been decreasing steadily from 4.87 in 2019 to 3.80 in 2023. This indicates that the company is selling its inventory at a slower rate. It may have excess or obsolete inventory that needs to be managed more effectively.
2. Receivables Turnover:
- The receivables turnover ratio has fluctuated over the years but generally shows an improving trend. The ratio increased from 5.61 in 2019 to 6.09 in 2023, suggesting that Danaher is collecting its accounts receivable more efficiently.
3. Payables Turnover:
- Danaher's payables turnover has been relatively stable over the years, with a slight increase from 5.23 in 2019 to 5.58 in 2023. This indicates that the company is managing its payables well and paying its suppliers in a timely manner.
4. Working Capital Turnover:
- The working capital turnover ratio increased significantly in 2021 to 8.40, then decreased to 4.22 in 2023. A higher turnover ratio indicates that Danaher is generating more revenue relative to its working capital. The sharp decrease in 2023 suggests a potential inefficiency in managing working capital.
Overall, while Danaher Corp. demonstrates efficiency in managing its receivables and payables, there are areas, such as inventory management and working capital utilization, where the company may need to focus on improvement for enhanced operational effectiveness.
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 | 50.49 | 44.79 | 47.73 | 46.83 | 42.02 |
| Days of sales outstanding (DSO) | days | 60.42 | 57.20 | 57.81 | 67.16 | 65.46 |
| Number of days of payables | days | 34.37 | 37.19 | 44.32 | 41.86 | 39.09 |
The activity ratios of Danaher Corp. provide insights into the efficiency of the company's operations over the past five years.
1. Days of Inventory on Hand (DOH): This ratio measures how many days, on average, it takes for the company to sell its inventory. From 2019 to 2023, Danaher's DOH has been gradually increasing, indicating that the company is holding onto its inventory for a longer period. This may suggest potential inefficiencies in managing inventory levels or a slowdown in sales.
2. Days of Sales Outstanding (DSO): DSO reflects the average number of days it takes for the company to collect payment after making a sale. Danaher's DSO has fluctuated over the years, with a slight decrease in 2023 compared to 2022. A lower DSO generally indicates more efficient collection of receivables, implying improved cash flow management.
3. Number of Days of Payables: This ratio measures how long, on average, the company takes to pay its suppliers. Danaher's days of payables have fluctuated but generally remained relatively stable over the years. A longer payment period could indicate that the company is effectively utilizing trade credit to manage cash flow.
Overall, while Danaher's activity ratios show some fluctuations, monitoring these metrics can help assess the company's operational efficiency and working capital management. It is crucial for the company to strike a balance between inventory levels, accounts receivable collection, and payment terms to optimize cash flow and profitability.
See also:
Danaher Corporation 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 | 5.20 | 8.46 | 7.71 | 6.74 | 7.73 |
| Total asset turnover | 0.28 | 0.37 | 0.35 | 0.29 | 0.29 |
The fixed asset turnover ratio for Danaher Corp. has exhibited fluctuations over the past five years, with values ranging from 5.25 in 2023 to 7.96 in 2022. This ratio indicates the company's ability to generate sales revenue relative to its investment in fixed assets. A higher ratio suggests that the company is efficiently utilizing its fixed assets to generate sales.
In terms of total asset turnover, the company has shown a similar pattern of variability, ranging from 0.28 in 2023 to 0.29 in 2019. This ratio reflects how well Danaher is utilizing its total assets to generate sales. A lower total asset turnover ratio may suggest that the company is less efficient in generating revenue from its total asset base.
Overall, Danaher Corp. has demonstrated varying levels of efficiency in utilizing both its fixed assets and total assets to generate sales revenue over the past five years. It is important for the company to closely monitor these ratios to ensure optimal utilization of its asset base and continued profitability.