DXC Technology Co (DXC)

Short-term

Turnover ratios

Inventory turnover for DXC Technology Co has been fluctuating over the years, with a significant decrease from 2019 to 2020 followed by a gradual increase in subsequent years. This ratio indicates the number of times inventory is sold and replaced during the period, showing efficiency in managing inventory levels.

Receivables turnover has been relatively stable over the years, indicating the company's ability to collect on credit sales. A consistent ratio suggests effective credit management practices.

Payables turnover has also shown fluctuations annually, with a notable decrease from 2021 to 2022 followed by an increase in 2023. This ratio reflects how quickly the company pays its suppliers, impacting cash flow and liquidity.

Working capital turnover saw a dramatic decrease in 2021 compared to the previous period and then a significant increase in 2022, followed by more stable numbers in subsequent years. This ratio measures how efficiently working capital is being utilized to generate sales, with high ratios indicating effective management of working capital resources.

Overall, analyzing these activity ratios provides insights into DXC Technology Co's operational efficiency, inventory management, accounts receivable collection, payment to suppliers, and utilization of working capital to drive revenue generation.

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Average number of days

Analyzing the activity ratios of DXC Technology Co, we observe the following trends:

1. Days of Inventory on Hand (DOH):
- The days of inventory on hand have shown some fluctuation over the past five years, ranging from 9.21 days in 2020 to 15.74 days in 2023.
- A lower DOH indicates that the company is efficiently managing its inventory turnover, whereas a higher DOH may suggest potential issues with inventory management.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding have remained relatively stable, with a slight increase from 81.89 days in 2020 to 87.04 days in 2023.
- A higher DSO value indicates that the company is taking longer to collect revenue from its customers, which may impact cash flow and liquidity.

3. Number of Days of Payables:
- The number of days of payables has shown some variability over the years, ranging from 17.21 days in 2021 to 23.36 days in 2024.
- A higher number of days of payables suggests that the company is taking longer to pay its suppliers, which can positively impact cash flow but may strain supplier relationships.

In summary, DXC Technology Co's activity ratios indicate some fluctuations in inventory management, stable trends in accounts receivable collection, and varying payment terms with suppliers. Monitoring these ratios can provide insights into the company's operational efficiency and working capital management.

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Long-term

The long-term activity ratios of DXC Technology Co, which include fixed asset turnover and total asset turnover, provide insights into the company's efficiency in generating revenue relative to its investments in fixed and total assets over the years.

The fixed asset turnover ratio has shown a generally positive trend, indicating an improvement in the company's ability to generate revenue from its fixed assets. The ratio has increased from 8.41 in 2020 to 9.71 in 2024, reflecting the company's effectiveness in utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio has also shown an increasing trend, signaling an enhancement in the company's overall asset efficiency. The ratio has risen from 0.75 in 2020 to 0.99 in 2024, suggesting that DXC Technology Co has become more proficient in generating revenue per dollar of total assets employed.

Overall, the upward movement in both the fixed asset turnover and total asset turnover ratios indicates that DXC Technology Co has been successful in optimizing its asset utilization and improving its operational efficiency, which is a positive signal for investors and stakeholders.