Hologic Inc (HOLX)

Short-term

Turnover ratios

The activity ratios of Hologic, Inc. reflect the company's efficiency in managing its resources and generating sales. The inventory turnover ratio indicates the number of times the company's inventory is sold and replaced over a given period, with a decreasing trend observed from 2019 to 2023. This suggests a potential slowdown in inventory management efficiency, although the current ratio of 2.55 still shows a moderate turnover.

In contrast, the receivables turnover ratio reflects the effectiveness of Hologic in collecting funds from its customers, with a fluctuating trend observed over the past five years. The highest turnover was observed in 2022, indicating a strong collection performance, but the ratio decreased in 2023, which might imply a potential delay in customer payments.

Moreover, the payables turnover ratio indicates the rate at which the company is paying off its suppliers, with a generally increasing trend observed from 2019 to 2023. This trend suggests that Hologic has been managing its payables more efficiently, potentially negotiating better terms with suppliers or streamlining payment processes.

Lastly, the working capital turnover ratio measures the efficiency of the company in utilizing its working capital to generate sales. The decreasing trend in this ratio over the years signals a decline in the company's ability to generate sales from its working capital, which could indicate a need for more effective working capital management.

Overall, these activity ratios provide insights into Hologic's operational efficiency, inventory management, collection practices, payables management, and working capital utilization over the past five years, offering valuable information for stakeholders and potential areas for improvement in the company's operations.

---

Average number of days

To analyze the activity ratios of Hologic, Inc., we will examine the days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables over the past five years.

1. Days of Inventory on Hand (DOH): This ratio indicates the average number of days it takes for the company to sell its inventory. Hologic's DOH has been increasing over the past five years, showing a longer period of time that the company's inventory remains on hand before being sold. This may imply slower inventory turnover, potentially leading to higher carrying costs and the risk of obsolescence.

2. Days of Sales Outstanding (DSO): This ratio reflects the average number of days it takes for Hologic to collect revenue after making a sale. The DSO has fluctuated over the years, indicating variability in the collection period. The decrease in DSO from 2022 to 2023 indicates an improvement in the company's collection efficiency.

3. Number of Days of Payables: This ratio represents the average number of days the company takes to pay its suppliers. Hologic has managed to reduce its number of days of payables from 2020 to 2023, suggesting a more efficient management of accounts payable.

In conclusion, Hologic's activity ratios depict a trend of increasing DOH, fluctuating DSO, and a decreasing number of days of payables. These ratios collectively suggest a need for the company to focus on inventory management and collection efficiency, while also maintaining a balance in its payables to suppliers.

---

Long-term

The fixed asset turnover ratio measures the efficiency of a company in generating sales from its fixed assets. Hologic, Inc.'s fixed asset turnover ratio has fluctuated over the years, with a significant decrease from 10.10 in 2022 to 7.80 in 2023. This suggests that the company may be less efficient in utilizing its fixed assets to generate sales in 2023 compared to the previous year. However, the ratio remains relatively high, indicating that the company is still effective in generating sales from its fixed assets.

Total asset turnover reflects a company's ability to generate sales from its total assets. Hologic, Inc.'s total asset turnover has also experienced fluctuations over the years, with a decrease from 0.54 in 2022 to 0.44 in 2023. This decline indicates that the company may be less effective in utilizing its total assets to generate sales in 2023. Overall, the downward trend in both fixed asset turnover and total asset turnover ratios may warrant further investigation into the company's asset utilization and sales generation strategies in the long term.