Garmin Ltd (GRMN)

Activity ratios

Short-term

Turnover ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Inventory turnover 2.54 2.35 2.57 2.48 2.32 2.11 2.10 1.95 1.89 1.75 1.84 2.01 2.10 2.44 2.81 2.88 3.03 2.66 2.57 2.67
Receivables turnover 6.39 6.50 6.99 7.89 6.45 7.08 6.90 — 7.38 7.63 7.09 8.43 5.87 7.68 6.58 7.88 4.92 5.97 7.12 7.64
Payables turnover 10.41 9.45 10.20 13.29 12.29 11.35 11.63 13.83 13.46 9.99 8.39 9.00 6.97 8.51 8.68 9.62 8.92 9.27 10.83 10.55
Working capital turnover 1.64 1.65 1.84 1.61 1.67 1.80 1.86 1.64 1.77 1.94 1.98 1.73 1.76 1.86 2.00 1.68 1.67 1.77 1.78 1.78

The activity ratios of Garmin Ltd reflect the efficiency with which the company manages its assets and operations.

1. Inventory Turnover: The inventory turnover ratio indicates how many times a company sells and replaces its inventory within a specific period. Garmin's inventory turnover has been fluctuating over the years, showing a decreasing trend from 2022 to 2024. This suggests that inventory turnover has slowed down, which can indicate inefficient inventory management or slowing sales.

2. Receivables Turnover: The receivables turnover ratio measures how efficiently a company collects cash from its credit sales. Garmin's receivables turnover has shown some variability but seems relatively stable over the years. A higher receivables turnover ratio indicates better efficiency in collecting accounts receivable.

3. Payables Turnover: The payables turnover ratio evaluates how quickly a company pays its suppliers. Garmin's payables turnover has fluctuated significantly, showing a decreasing trend from 2020 to 2021 before increasing again in 2022 and 2023. A lower payables turnover ratio could suggest a longer payment period to suppliers.

4. Working Capital Turnover: The working capital turnover ratio assesses how effectively a company utilizes its working capital to generate sales. Garmin's working capital turnover has also shown fluctuations, indicating changes in the efficiency of working capital management over the years.

Overall, analyzing these activity ratios helps in understanding how efficiently Garmin manages its assets and operations, providing insights into its inventory management, collections, payments to suppliers, and utilization of working capital.

Average number of days

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Days of inventory on hand (DOH) days 143.85 155.42 142.22 147.12 157.50 172.80 173.47 186.92 193.35 208.58 197.98 181.70 173.79 149.81 129.88 126.79 120.40 137.31 141.90 136.46
Days of sales outstanding (DSO) days 57.15 56.17 52.19 46.24 56.63 51.57 52.87 — 49.43 47.84 51.46 43.27 62.17 47.51 55.44 46.30 74.20 61.12 51.29 47.75
Number of days of payables days 35.07 38.61 35.77 27.46 29.70 32.17 31.40 26.39 27.11 36.55 43.51 40.56 52.39 42.87 42.06 37.95 40.90 39.36 33.71 34.59

The activity ratios for Garmin Ltd provide insights into the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH):
- Garmin's DOH has shown a fluctuating trend over the years, indicating changes in inventory management efficiency.
- The average DOH has increased from around 150 days in 2022 to approximately 140 days in 2024.
- A high DOH may suggest excess inventory levels or slow-moving inventory, potentially tying up cash and increasing carrying costs.

2. Days of Sales Outstanding (DSO):
- The DSO for Garmin demonstrates variability over time, reflecting the company's credit and collection policies.
- The DSO ranges from around 40 days to 70 days, with some fluctuations seen in different quarters.
- A lower DSO indicates efficient collection of receivables, whereas a higher DSO could signify potential issues with credit risk or collection processes.

3. Number of Days of Payables:
- Garmin's payables period has been relatively stable, with some fluctuations observed in the data.
- The average number of days of payables has decreased from approximately 40 days in 2020 to around 30 days in 2024.
- A lower number of days of payables implies faster payment to suppliers, while a higher number may suggest favorable credit terms or liquidity constraints.

Overall, analyzing these activity ratios together can help assess Garmin Ltd's working capital management and operational efficiency in managing inventory, receivables, and payables effectively to support its business operations.

Long-term

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Fixed asset turnover 5.08 4.91 4.69 4.55 4.29 4.30 4.19 4.15 4.23 4.45 4.45 4.63 4.64 5.04 5.07 5.11 4.88 4.83 4.71 5.07
Total asset turnover 0.65 0.64 0.64 0.64 0.61 0.64 0.63 0.63 0.63 0.64 0.63 0.66 0.63 0.65 0.66 0.63 0.59 0.60 0.60 0.63

Garmin Ltd's Fixed Asset Turnover ratio has shown a gradual decline from 5.07 in March 2020 to 4.29 in December 2023 before slightly increasing to 5.08 by December 2024. This ratio indicates that the company generated $4.29 in net sales for every dollar invested in fixed assets as of December 31, 2023.

On the other hand, Garmin Ltd's Total Asset Turnover ratio fluctuated between 0.59 and 0.66 from December 31, 2020, to June 30, 2024. This ratio highlights how efficiently the company is utilizing its total assets to generate revenue. As of December 31, 2024, Garmin Ltd was generating approximately $0.65 in sales for every dollar invested in total assets.

Overall, the company's Fixed Asset Turnover ratio fluctuated over the years, showcasing variations in the efficiency of utilizing fixed assets to generate sales. In contrast, the Total Asset Turnover ratio remained relatively stable, indicating consistent efficiency in generating revenue from total assets.