Edgewell Personal Care Co (EPC)

Short-term

Turnover ratios

Certainly! Let's analyze Edgewell Personal Care Co's activity ratios based on the provided data.

1. Inventory Turnover:
The inventory turnover ratio measures how efficiently a company is managing its inventory. Edgewell's inventory turnover has decreased from 3.29 in 2019 to 2.66 in 2023. This indicates a decline in the efficiency of converting inventory into sales over the years. A lower inventory turnover could suggest overstocking, obsolete inventory, or challenges in selling products.

2. Receivables Turnover:
The receivables turnover ratio reflects how effectively a company is collecting payments from its customers. Edgewell's receivables turnover has shown a positive trend, increasing from 8.41 in 2019 to 18.00 in 2023. This improvement suggests that the company has become more efficient in collecting payments from its customers, which is a positive trend for its cash flow and liquidity.

3. Payables Turnover:
The payables turnover ratio assesses how efficiently a company is managing its accounts payable. Edgewell's payables turnover has shown a generally increasing trend, rising from 5.27 in 2019 to 6.74 in 2023. This indicates that the company is taking longer to pay its suppliers, which could be a sign of improved cash management.

4. Working Capital Turnover:
The working capital turnover ratio measures how effectively a company is utilizing its working capital to generate sales. Edgewell's working capital turnover has fluctuated over the years, but the overall trend has been a decrease from 5.56 in 2019 to 5.13 in 2023. A decreasing trend suggests that the company is generating fewer sales per dollar of working capital, which may indicate inefficiencies in the utilization of its resources.

In conclusion, Edgewell Personal Care Co's financial ratios reveal both positive and negative trends. While improvements in receivables turnover and payables turnover are positive indicators of efficient cash management, the declining inventory turnover and working capital turnover ratios raise concerns about inventory management and resource utilization. Further analysis of the company's operational and financial strategies would be beneficial in understanding the underlying reasons for these trends and identifying areas for improvement.

---

Average number of days

The activity ratios provide insight into how efficiently Edgewell Personal Care Co is managing its inventory, collecting receivables, and paying its suppliers. Let's analyze the data for the last five years:

Days of Inventory on Hand (DOH):
Over the five-year period, Edgewell Personal Care Co's Days of Inventory on Hand has been gradually increasing, indicating that the company is taking longer to sell its inventory. This may suggest issues with demand forecasting, production inefficiencies, or overstocking of inventory. However, the increase in DOH could also be a deliberate strategy to maintain higher inventory levels to meet potential demand fluctuations.

Days of Sales Outstanding (DSO):
Edgewell's Days of Sales Outstanding has shown a declining trend over the years, which is a positive sign. It means that the company is collecting its receivables more quickly, improving its cash flow and reducing the risk of bad debts. This indicates effective credit management and efficient collection processes.

Number of Days of Payables:
The number of days of payables for Edgewell has fluctuated over the years, but in the most recent period, it decreased. This suggests that the company is taking fewer days to pay its suppliers, which can sometimes indicate improved supplier relationships or negotiating better payment terms. However, it's essential to ensure that this reduction in payables days is not at the expense of straining the company's cash position.

Overall, the trend in activity ratios shows that Edgewell has been able to improve its efficiency in collecting receivables, but it may need to address inventory management to reduce the days of inventory on hand. Managing payables effectively will also be important to maintain a healthy cash flow and sustainable supplier relationships.

---

Long-term

The long-term activity ratios provide insights into how efficiently Edgewell Personal Care Co is utilizing its assets to generate sales, specifically focusing on fixed assets and total assets.

Fixed asset turnover: This ratio measures the company's ability to generate sales from its investment in fixed assets. The increasing trend from 5.41 in 2019 to 6.66 in 2023 indicates that Edgewell Personal Care Co has become more efficient in utilizing its fixed assets to generate revenue. The company has been able to increase sales relative to its investment in property, plant, and equipment over the years.

Total asset turnover: This ratio reflects how effectively the company is using all of its assets to generate sales. The declining trend from 0.63 in 2019 to 0.60 in 2023 suggests that Edgewell's efficiency in utilizing total assets to produce revenue has deteriorated slightly over the years. However, the ratio has remained relatively stable, indicating that the company is still able to generate sales with its asset base, albeit with a slightly declining trend.

In conclusion, Edgewell Personal Care Co has exhibited strong efficiency in generating sales from its fixed assets, as indicated by the increasing trend in fixed asset turnover. However, the trend in total asset turnover suggests a slight decrease in the efficiency of utilizing all assets to generate revenue. Overall, the company's long-term activity ratios paint a picture of effective utilization of fixed assets, with some room for improvement in optimizing the use of total assets.