Embecta Corp (EMBC)

Short-term

Turnover ratios

Embecta Corp's activity ratios provide insights into its operational efficiency and effectiveness in managing its resources. The inventory turnover ratio has shown fluctuations over the past six quarters, ranging from 2.00 to 5.01. This indicates that the company is able to sell its inventory multiple times within a year, with a notable increase in inventory turnover between the first and second quarters of 2023.

The receivables turnover ratio demonstrates the company's ability to collect outstanding payments from customers. Embecta Corp's receivables turnover has also fluctuated but generally remained at a healthy level, ranging from 5.41 to 8.44. The higher turnover ratios indicate that the company is efficient in converting its accounts receivable into cash.

In terms of payables turnover, Embecta Corp has consistently shown ratios above 2.00, indicating that the company is managing its accounts payable effectively. The payables turnover ratio has ranged from 2.28 to 7.50, showing an increasing trend in the most recent quarters. This suggests that the company may be taking longer to pay its suppliers or negotiating more favorable payment terms.

The working capital turnover ratio measures how efficiently the company is utilizing its working capital to generate sales. Embecta Corp's working capital turnover has remained relatively stable, ranging from 2.76 to 3.09. This indicates that the company is effectively generating sales revenue relative to its working capital investment.

Overall, based on the activity ratios, Embecta Corp appears to be managing its resources efficiently, with notable strengths in inventory turnover and receivables turnover. The company may benefit from further analysis on its payables turnover to ensure optimal management of its cash flow and supplier relationships.

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Average number of days

Based on the activity ratios provided for Embecta Corp, we can observe the following trends:

1. Days of Inventory on Hand (DOH): This ratio indicates how many days, on average, it takes for the company to sell its inventory. Over the six-month period, the DOH fluctuated significantly, ranging from 72.82 days to 182.06 days. The inventory turnover has been inconsistent, possibly indicating issues with inventory management or changing demand for the company's products.

2. Days of Sales Outstanding (DSO): DSO measures the average number of days it takes for the company to collect its accounts receivable. In the period under review, the DSO ranged from 43.25 days to 67.46 days. A lower DSO is generally preferable as it indicates faster collection of receivables and better liquidity.

3. Number of Days of Payables: This ratio reflects how long a company takes to pay its creditors. The number of days of payables ranged from 48.66 days to 159.97 days. A higher number of days of payables may suggest that the company is taking longer to settle its obligations, potentially indicating cash flow stress or negotiating favorable payment terms with suppliers.

In summary, Embecta Corp's activity ratios show fluctuations in inventory management, accounts receivable collection, and payment practices over the period. Further analysis would be required to understand the underlying reasons for these fluctuations and their impact on the company's overall financial performance and operational efficiency.

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Long-term

The long-term activity ratios of Embecta Corp provide valuable insight into the efficiency of the company's utilization of its fixed assets and total assets to generate revenue.

The fixed asset turnover ratio has been relatively stable over the analyzed period, ranging from 3.97 to 4.22. This ratio indicates that for every dollar invested in fixed assets, Embecta Corp generates between $3.97 and $4.22 in sales. A higher fixed asset turnover ratio signifies better efficiency in asset utilization, as it indicates that the company is effectively using its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio has shown some fluctuation, with values ranging from 0.89 to 1.03. This ratio reflects the company's ability to generate sales from all of its assets, including fixed and current assets. A lower total asset turnover ratio may indicate that Embecta Corp is not efficiently utilizing all of its assets to generate revenue.

Overall, the stable trend in the fixed asset turnover ratio suggests that Embecta Corp is effectively utilizing its fixed assets to generate sales. However, the fluctuation in the total asset turnover ratio indicates some variability in the company's overall asset efficiency. Further analysis of the components of the total assets and the company's industry peers may provide additional insights into the company's asset management efficiency.