Hologic Inc (HOLX)

Short-term

Turnover ratios

The activity ratios of Hologic Inc provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital over the last five years.

1. Inventory Turnover: Hologic Inc's inventory turnover has shown a declining trend over the past five years, from 3.92 in 2020 to 2.65 in 2024. This implies that the company is taking longer to sell its inventory, which could indicate potential issues with managing its inventory levels or demand for its products.

2. Receivables Turnover: Hologic Inc's receivables turnover has generally been increasing, reaching 6.71 in 2024 from 3.67 in 2020. This suggests that the company is collecting its accounts receivable more efficiently, possibly due to improved credit policies or better customer payment practices.

3. Payables Turnover: The payables turnover ratio has fluctuated over the years but has remained relatively stable overall. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently, potentially benefiting from early payment discounts or favorable supplier relationships.

4. Working Capital Turnover: The working capital turnover ratio measures how effectively the company is using its working capital to generate sales. Hologic Inc's working capital turnover has decreased significantly from 3.84 in 2020 to 1.45 in 2024, indicating a decline in the efficiency of its working capital management.

Overall, while Hologic Inc has shown improvements in receivables turnover and relatively stable payables turnover, the declining trend in inventory turnover and working capital turnover raises concerns about the company's operational efficiency and working capital management. Further analysis and potential operational adjustments may be necessary to address these declining trends.

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Average number of days

Activity ratios provide insights into how efficiently a company manages its assets and liabilities. Let's analyze Hologic Inc's activity ratios over the past five years:

1. Days of Inventory on Hand (DOH):
- The DOH measures the number of days it takes for a company to sell its inventory. Higher DOH values indicate slower inventory turnover.
- Hologic's DOH has been increasing steadily over the past five years, from 93.11 days in 2020 to 137.66 days in 2024. This suggests that the company is taking longer to sell its inventory.

2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects the average number of days it takes for a company to collect its accounts receivable. Lower DSO values indicate faster collections.
- Hologic's DSO has fluctuated over the years, with a notable decrease from 99.45 days in 2020 to 47.90 days in 2022 before increasing to 54.37 days in 2024. This implies some inconsistency in the company's collection efficiency.

3. Number of Days of Payables:
- This ratio shows the average number of days a company takes to pay its suppliers. Higher values suggest a longer payment period.
- Hologic's number of days of payables has varied, with an increase from 42.13 days in 2020 to 41.27 days in 2024, indicating a slight extension in the payment period.

In conclusion, Hologic Inc's activity ratios reveal mixed performance in managing its assets and liabilities. The company has experienced slower inventory turnover, some inconsistency in collecting receivables, and a slight extension in the payment period to suppliers. Further scrutiny and analysis are necessary to understand the underlying reasons for these trends and to improve overall operational efficiency.

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Long-term

The long-term activity ratios for Hologic Inc demonstrate the company's effectiveness in utilizing its fixed assets and total assets to generate revenue over the years.

The fixed asset turnover ratio indicates how efficiently the company is generating revenue from its investment in fixed assets. Hologic's fixed asset turnover has been relatively stable over the past five years, ranging from 7.49 to 10.10. This suggests that the company is consistently generating revenue from its fixed assets, with a slight decrease in efficiency between 2023 and 2024. Overall, the company appears to be effectively utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio reflects the company's ability to generate revenue from all assets, including both fixed and current assets. Hologic's total asset turnover has been fluctuating over the years, ranging from 0.44 to 0.63. The decreasing trend in total asset turnover between 2021 and 2023 followed by a slight increase in 2024 may indicate challenges in efficiently utilizing the company's total asset base to generate sales during those years.

In summary, Hologic Inc has shown consistent efficiency in generating revenue from its fixed assets, while the trend in total asset turnover suggests the company may benefit from further improvements in utilizing its total asset base to drive sales.