Embecta Corp (EMBC)

Short-term

Turnover ratios

Embecta Corp's activity ratios provide insights into how efficiently the company manages its operations.

1. Inventory turnover: The company's inventory turnover ratio has improved steadily from 2.00 in Sep 2022 to 4.47 in Sep 2024, indicating that the company is selling its inventory more frequently. This suggests effective inventory management and faster conversion of inventory into sales.

2. Receivables turnover: The receivables turnover ratio has fluctuated but generally remained within a healthy range. The ratio was highest in Dec 2022 at 8.44 and has since decreased to 4.53 in Sep 2024. A higher turnover indicates that the company is collecting its receivables more quickly, which is a positive sign of efficient credit management.

3. Payables turnover: Embecta Corp's payables turnover has also shown variability, ranging from 2.28 in Sep 2022 to 8.45 in Mar 2024. A higher turnover ratio implies that the company is paying its suppliers more frequently. This could suggest good relationships with suppliers or effective cash management.

4. Working capital turnover: The working capital turnover ratio has remained relatively stable around 2.80, indicating that Embecta Corp is generating revenue efficiently relative to its level of working capital. This ratio measures how effectively the company is using its working capital to generate sales.

Overall, the trend in activity ratios suggests that Embecta Corp is effectively managing its inventory, receivables, payables, and working capital to support its operations and generate sales. However, periodic fluctuations in these ratios indicate the need for ongoing monitoring and potential adjustments in the company's operational strategies.

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Average number of days

Embecta Corp's activity ratios provide insights into the efficiency of its operations and management of inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- The DOH indicates the number of days it takes for Embecta Corp to sell its inventory.
- Over the last nine quarters, Embecta Corp has shown fluctuations in its DOH, ranging from 72.68 days to 175.05 days.
- The decrease in DOH from the previous quarter suggests the company may be managing its inventory more efficiently recently.

2. Days of Sales Outstanding (DSO):
- The DSO measures the average number of days it takes for Embecta Corp to collect payment from its customers.
- The DSO has ranged from 43.25 days to 80.64 days over the last nine quarters.
- The recent increase in DSO compared to the previous quarter may indicate potential challenges in collecting receivables promptly.

3. Number of Days of Payables:
- This ratio evaluates how long Embecta Corp takes to pay its suppliers or trade payables.
- Embecta Corp has varied significantly in its days of payables, from 43.22 days to 159.97 days over the last nine quarters.
- The decrease in days of payables from the prior quarter signifies that the company may be settling its payables more quickly.

Overall, the analysis of Embecta Corp's activity ratios suggests improvements in inventory management efficiency and a need to focus on prompt collection of receivables to enhance working capital. Additionally, the company's management of payables also shows variability, indicating a need for consistency in handling supplier payments.

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Long-term

The fixed asset turnover ratio measures the efficiency of a company in generating sales revenue from its fixed assets. Embecta Corp's fixed asset turnover ratio has been relatively consistent around 4.20 times for the past few quarters. This indicates that the company is effectively utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio reflects how efficiently a company is using all its assets to generate sales. Embecta Corp's total asset turnover ratio has been fluctuating between 0.87 and 0.94 over the past few quarters. The decreasing trend from 1.03 in September 2022 suggests that the company's efficiency in generating sales revenue from all its assets has declined.

Overall, Embecta Corp's fixed asset turnover is stable, indicating efficient use of fixed assets. However, the fluctuating total asset turnover ratio suggests a need for the company to focus on improving its overall asset utilization efficiency to drive higher sales revenue.