Gilead Sciences Inc (GILD)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 8.77 | 10.62 | 7.42 | 2.92 | 5.43 |
| Receivables turnover | 5.63 | 5.53 | 5.86 | 5.04 | 6.27 |
| Payables turnover | 28.50 | 17.69 | 17.04 | 5.81 | 7.02 |
| Working capital turnover | 5.46 | 8.24 | 8.33 | 5.37 | 1.09 |
Gilead Sciences, Inc.'s activity ratios provide insights into the efficiency of its operations and management of its resources.
1. Inventory Turnover: Gilead's inventory turnover has fluctuated over the years, ranging from 2.72 to 5.07 times. This ratio indicates how many times the company's inventory is sold and replaced during the year. A higher turnover suggests effective inventory management, with Gilead's performance improving from 2020 to 2021 before declining slightly in 2023.
2. Receivables Turnover: Gilead's receivables turnover has remained relatively stable between 5.05 and 6.27 times. This ratio reflects how quickly the company collects payments from its customers. The consistency in this ratio suggests that Gilead has been successful in managing its accounts receivable efficiently.
3. Payables Turnover: Gilead's payables turnover has shown significant variability over the years, with a range of 5.42 to 11.81 times. This ratio illustrates how quickly the company pays its suppliers. The substantial increase in 2023 compared to previous years may indicate improved liquidity management or negotiation strategies with vendors.
4. Working Capital Turnover: Gilead's working capital turnover has fluctuated notably, ranging from 1.09 to 8.64 times. This ratio reflects how effectively the company utilizes its working capital to generate revenue. The significant variations in this ratio suggest changes in Gilead's operating efficiency and capital deployment strategies over the years, with 2018 and 2019 showing a much lower turnover compared to subsequent years.
In conclusion, Gilead Sciences, Inc.'s activity ratios highlight the company's performance in managing its inventory, receivables, payables, and working capital. The fluctuations in these ratios indicate changes in operational efficiency and resource utilization over the years, reflecting the company's ability to adapt to evolving market conditions and optimize its financial performance.
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 | 41.62 | 34.37 | 49.16 | 125.21 | 67.24 |
| Days of sales outstanding (DSO) | days | 64.85 | 66.01 | 62.30 | 72.46 | 58.24 |
| Number of days of payables | days | 12.81 | 20.64 | 21.42 | 62.79 | 52.00 |
Activity ratios measure how effectively a company manages its assets to generate sales, collect payments from customers, and pay its bills. Let's analyze the activity ratios of Gilead Sciences, Inc. based on the provided data.
1. Days of Inventory on Hand (DOH):
- Gilead Sciences' inventory turnover has been fluctuating over the past five years, ranging from 71.99 days in 2019 to 134.36 days in 2020. The decrease in DOH from 2020 to 2021 indicates improved inventory management efficiency, followed by relatively stable figures in 2022 and 2023.
- A higher DOH value signifies that Gilead Sciences is holding inventory for a longer period before selling, which could tie up working capital and increase carrying costs.
2. Days of Sales Outstanding (DSO):
- The company's DSO has also shown variability, with a peak of 72.32 days in 2020 and a low point of 58.24 days in 2019. The decreasing trend in DSO from 2020 to 2021 reflects a faster collection of receivables from customers.
- A lower DSO indicates that Gilead Sciences is efficiently converting its accounts receivable into cash, enhancing liquidity and reducing the risk of bad debt.
3. Number of Days of Payables:
- Gilead Sciences' days of payables have fluctuated significantly over the years, with notable differences between 2019 and 2020, and a varying pattern thereafter. The decrease in payables days from 2019 to 2020 could suggest a change in payment terms with suppliers or improved cash management strategies.
- A longer payment period may indicate that the company is effectively utilizing trade credit to manage cash flow, but it could also strain supplier relationships if excessively prolonged.
Overall, Gilead Sciences should strive to maintain a balance in its activity ratios to optimize working capital efficiency. An efficient management of inventory, receivables, and payables can enhance liquidity, profitability, and operational performance of the company. Monitoring and analyzing these ratios consistently can help identify areas for improvement and strategic decision-making.
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Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.93 | 4.82 | 5.14 | 4.97 | 4.99 |
| Total asset turnover | 0.42 | 0.42 | 0.39 | 0.36 | 0.36 |
Gilead Sciences, Inc.'s long-term activity ratios indicate the company's efficiency in utilizing its assets to generate revenue over the years. The fixed asset turnover has shown a relatively stable trend, with a slight fluctuation between 4.97 and 5.33 from 2019 to 2023. This suggests that the company is effectively using its fixed assets to generate sales, with a peak in 2021.
In contrast, the total asset turnover ratio has improved gradually over the same period, increasing from 0.36 in 2019 to 0.44 in 2023. This indicates that Gilead Sciences has been more efficient in utilizing its total assets to generate revenue, reflecting a positive trend in asset management efficiency.
Overall, the firm's long-term activity ratios suggest that Gilead Sciences, Inc. has effectively managed its assets to generate sales, with improvements in total asset turnover indicating increased efficiency in utilizing all assets to drive revenue growth over the years.