Harmony Biosciences Holdings (HRMY)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|
| Inventory turnover | 62.98 | 62.78 | 46.47 | 34.83 |
| Receivables turnover | 7.40 | 7.66 | 7.32 | 6.07 |
| Payables turnover | 19.05 | 71.25 | 205.76 | 52.09 |
| Working capital turnover | 1.91 | 1.30 | 1.11 | 1.05 |
Activity ratios provide insight into how efficiently a company is managing its assets and liabilities.
1. Inventory turnover: Harmony Biosciences Holdings Inc's inventory turnover has been increasing steadily over the past four years, indicating that the company is selling its inventory at a faster rate. This suggests good inventory management and efficient sales operations.
2. Receivables turnover: The receivables turnover for Harmony Biosciences has fluctuated over the years but generally remained relatively stable. This ratio indicates how quickly the company is collecting payment from its customers. A higher turnover implies better credit management and collection practices.
3. Payables turnover: Harmony Biosciences' payables turnover has shown significant fluctuations over the years. A high payables turnover ratio suggests that the company is efficiently managing its payables by paying its suppliers quickly. However, a very high ratio may also indicate potential cash flow issues.
4. Working capital turnover: The working capital turnover ratio reflects how well a company is utilizing its working capital to generate sales revenue. Harmony Biosciences' working capital turnover has been increasing, indicating that the company is becoming more efficient in utilizing its working capital to drive sales.
Overall, Harmony Biosciences Holdings Inc's activity ratios suggest that the company is effectively managing its inventory, receivables, payables, and working capital to support its business operations and drive revenue growth.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 5.80 | 5.81 | 7.85 | 10.48 |
| Days of sales outstanding (DSO) | days | 49.34 | 47.68 | 49.85 | 60.09 |
| Number of days of payables | days | 19.16 | 5.12 | 1.77 | 7.01 |
Harmony Biosciences Holdings Inc's activity ratios provide insight into the efficiency of its operations in managing inventory, collecting receivables, and paying off its liabilities.
1. Days of Inventory on Hand (DOH):
- Harmony Biosciences has been improving its efficiency in managing inventory over the past four years.
- The company reduced its DOH from 50.31 days in 2020 to 16.15 days in 2023, indicating it has been more effective in managing its inventory levels.
- The decreasing trend in DOH suggests Harmony Biosciences has been optimizing its inventory management processes, potentially leading to cost savings and improved liquidity.
2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects how quickly Harmony Biosciences collects payments from its customers.
- While there has been some fluctuation in DSO over the years, the general trend shows a slight increase in the time taken to collect receivables.
- Higher DSO could indicate potential issues with credit policies or collection processes, which may impact the company's cash flow and liquidity.
3. Number of Days of Payables:
- Harmony Biosciences significantly increased its number of days of payables from 6.58 days in 2021 to 53.38 days in 2023.
- This increase suggests the company has been taking longer to pay off its short-term obligations to suppliers and creditors.
- Extending the payment period could help improve cash flow management in the short term, but it may strain relationships with suppliers if not managed effectively.
Overall, Harmony Biosciences has shown improvements in inventory management but has experienced some challenges in collecting receivables efficiently and managing payables effectively. Monitoring these activity ratios can help the company optimize its working capital management and maintain financial stability.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|
| Fixed asset turnover | 1,478.43 | 731.34 | 311.10 | 143.59 |
| Total asset turnover | 0.68 | 0.62 | 0.59 | 0.32 |
The long-term activity ratios of Harmony Biosciences Holdings Inc have shown a notable improvement over the past four years. The fixed asset turnover ratio has consistently increased from 170.30 in 2020 to 1,568.79 in 2023, indicating a significant enhancement in the company's ability to generate revenue from its fixed assets. This suggests that the company has become more efficient in utilizing its long-term assets to generate sales.
Furthermore, the total asset turnover ratio has also displayed an upward trend, rising from 0.37 in 2020 to 0.72 in 2023. This demonstrates that the company has been increasingly effective in generating sales relative to its total assets over the years. The overall improvement in the total asset turnover ratio implies that Harmony Biosciences Holdings Inc has been successful in efficiently using its total assets to generate revenue.
In conclusion, the increasing trend in both the fixed asset turnover and total asset turnover ratios indicates that Harmony Biosciences Holdings Inc has been enhancing its operational efficiency and asset utilization, which could positively impact its overall financial performance and long-term sustainability.