Embecta Corp (EMBC)

Short-term

Turnover ratios

Inventory turnover measures how efficiently a company manages its inventory. Embecta Corp's inventory turnover has decreased over the past three years, from 5.77 in 2022 to 4.45 in 2024. This suggests that the company is taking longer to sell its inventory, which could indicate issues with demand forecasting or excess inventory levels.

Receivables turnover assesses how quickly a company collects its accounts receivable. Embecta Corp's receivables turnover has also decreased over the same period, indicating that it is taking longer to collect payments from customers. This could be a sign of potential credit issues with customers or inefficient accounts receivable management.

Payables turnover evaluates how efficiently a company pays its suppliers. Embecta Corp's payables turnover has remained fairly consistent over the three years, suggesting that the company is maintaining a stable relationship with its suppliers in terms of payment terms.

Working capital turnover measures how effectively a company utilizes its working capital to generate sales. Embecta Corp's working capital turnover has shown a slight increase over the period, indicating that the company is generating more sales relative to its working capital. This could imply improved efficiency in utilizing its current assets to drive revenue.

Overall, Embecta Corp's activity ratios highlight potential concerns in inventory and receivables management, which may require closer attention to optimize working capital efficiency and overall financial performance.

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Average number of days

The activity ratios for Embecta Corp indicate the efficiency of the company in managing its inventory, receivables, and payables over the past three years.

1. Days of inventory on hand (DOH) have been increasing steadily from 63.22 days in 2022 to 81.93 days in 2024. This suggests that the company is taking longer to turn its inventory into sales, which could potentially tie up resources and increase carrying costs.

2. Days of sales outstanding (DSO) have shown fluctuations over the same period, with a significant increase from 43.13 days in 2022 to 80.52 days in 2024. A higher DSO indicates that it is taking Embecta Corp more days to collect payments from its customers, potentially impacting cash flows and liquidity.

3. The number of days of payables has remained relatively stable, with a slight increase from 55.55 days in 2022 to 63.78 days in 2024. This suggests that the company is taking a consistent amount of time to pay its suppliers.

Overall, the trend in these activity ratios indicates a potential concern regarding the management of inventory and receivables, which could lead to liquidity challenges if not addressed effectively. Tracking and improving these ratios can help Embecta Corp optimize its working capital management and overall operational efficiency.

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Long-term

The long-term activity ratios for Embecta Corp, specifically the fixed asset turnover and total asset turnover, provide insights into the company's efficiency in generating sales relative to its fixed assets and total assets over the past three years.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures the efficiency of a company in utilizing its fixed assets to generate sales revenue. A higher ratio indicates better utilization of fixed assets.
- Embecta Corp's fixed asset turnover has shown a consistent improvement over the last three years, from 4.16 in 2023 to 4.31 in 2024.
- This suggests that the company has been able to generate more sales relative to its investment in fixed assets, reflecting efficient utilization and potentially effective management of its long-term assets.

2. Total Asset Turnover:
- The total asset turnover ratio evaluates how well a company utilizes all its assets, including both fixed and current assets, to generate sales. A higher ratio signifies efficient use of all assets.
- Embecta Corp's total asset turnover has displayed a declining trend from 1.04 in 2022 to 0.87 in 2024.
- This downward movement may indicate that the company's total assets are not generating sales as effectively as in previous years. It could be a result of changes in the composition of assets or a decrease in sales relative to the asset base.

Overall, while Embecta Corp has shown improvement in utilizing its fixed assets efficiently, there appears to be a decline in the efficiency of its total asset utilization over the period analyzed. Further analysis of the company's asset management strategies and sales performance may be necessary to understand the underlying reasons for these trends and to identify potential areas for improvement.