Edwards Lifesciences Corp (EW)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	2.75	3.09	3.79	2.89	3.68
Receivables turnover	7.74	8.34	8.96	8.52	7.97
Payables turnover	15.93	13.41	13.45	11.78	13.09
Working capital turnover	2.11	2.59	2.43	1.99	2.08

Activity ratios provide insights into how efficiently a company is managing its assets and liabilities. Let's analyze the activity ratios of Edwards Lifesciences Corp based on the provided data.

1. Inventory turnover:
Inventory turnover measures how many times a company sells and replaces its inventory during a period. A higher inventory turnover indicates that inventory is moving quickly, which can reduce carrying costs and the risk of obsolescence. In the case of Edwards Lifesciences Corp, we see a fluctuating trend over the past five years, with a peak in 2021 and a slight decrease in 2023. This suggests some variability in managing inventory levels efficiently.

2. Receivables turnover:
Receivables turnover measures how many times a company collects its accounts receivable during a period. A higher turnover indicates that the company is efficient in collecting payments from customers. Edwards Lifesciences Corp has maintained a relatively stable and healthy receivables turnover ratio over the years, indicating effective credit and collection practices.

3. Payables turnover:
Payables turnover measures how many times a company pays its suppliers or trade payables during a period. A higher turnover suggests the company is managing its payables efficiently. Edwards Lifesciences Corp has shown an upward trend in payables turnover, indicating better management of payment terms with suppliers, which can improve cash flow and liquidity.

4. Working capital turnover:
Working capital turnover measures how efficiently a company uses its working capital to generate sales. A higher turnover ratio implies better utilization of working capital. Edwards Lifesciences Corp's working capital turnover has shown some variability but generally remained above 2.0, indicating that the company effectively utilizes its working capital to generate revenue.

In summary, while Edwards Lifesciences Corp demonstrates efficiency in managing receivables and payables, there may be opportunities to improve inventory turnover to ensure optimal utilization of resources. Monitoring and improving activity ratios can help the company enhance its operational performance and financial health.

Average number of days

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	132.86	118.02	96.43	126.51	99.06
Days of sales outstanding (DSO)	days	47.17	43.77	40.72	42.86	45.79
Number of days of payables	days	22.91	27.22	27.14	30.98	27.88

Days of Inventory on Hand (DOH) measures how many days it takes for a company to sell its average inventory. A higher DOH indicates slower inventory turnover. Edwards Lifesciences Corp's DOH has been increasing steadily over the past five years, from 209.91 days in 2019 to 309.03 days in 2023, which may signify inefficiencies in inventory management.

Days of Sales Outstanding (DSO) reflects the average number of days it takes for a company to collect payment after making a sale. A lower DSO is preferable as it indicates faster cash collection. Edwards Lifesciences Corp has demonstrated relatively consistent DSO levels over the five-year period, with a slight increase from 46.38 days in 2021 to 50.87 days in 2023.

Number of Days of Payables measures how long a company takes to pay its suppliers. A higher number indicates that the company is taking longer to pay its bills. Edwards Lifesciences Corp's days of payables have fluctuated over the years, with noticeable variations between 2019 and 2022. In 2023, the figure decreased to 53.28 days compared to 68.21 days in 2022.

Overall, the trend in Edwards Lifesciences Corp's activity ratios suggests room for improvement in managing inventory levels more efficiently and potentially focusing on enhancing payment cycles to optimize working capital management.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	3.43	3.28	3.37	3.14	4.09
Total asset turnover	0.64	0.65	0.61	0.61	0.67

The fixed asset turnover ratio for Edwards Lifesciences Corp has shown a relatively stable trend over the past five years, ranging from 3.14 to 4.10. This indicates that, on average, the company generates between 3.14 and 4.10 dollars in revenue for every dollar invested in fixed assets. The increasing trend in the fixed asset turnover ratio until 2019 suggests an improvement in the efficiency of utilizing fixed assets to generate sales. However, the slight decrease in the ratio in 2020 and 2022 followed by a slight increase in 2023 may indicate some fluctuations in asset utilization efficiency over the years.

In contrast, the total asset turnover ratio for the company has shown a less stable trend, fluctuating between 0.61 and 0.67 over the same period. This ratio indicates how efficiently the company is using all its assets to generate sales revenue. The fluctuations in the total asset turnover ratio suggest varying levels of efficiency in utilizing all assets to generate revenue throughout the years.

Overall, the comparison of the fixed asset turnover ratio and total asset turnover ratio indicates that Edwards Lifesciences Corp has been relatively efficient in using its fixed assets to generate revenue, with a consistent performance over the years. However, the company's efficiency in utilizing all its assets to generate sales revenue has shown more variability, which may warrant further investigation into factors affecting asset turnover.