Illumina Inc (ILMN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.76 | 3.00 | 2.84 | 3.18 | 2.78 |
| Receivables turnover | 5.95 | 6.14 | 6.83 | 6.98 | 6.65 |
| Payables turnover | 6.84 | 7.18 | 5.50 | 4.13 | 5.40 |
| Working capital turnover | 3.65 | 4.33 | 5.82 | 2.79 | 1.00 |
Activity ratios provide insight into how efficiently a company manages its assets and liabilities to generate sales. Let's analyze Illumina Inc's activity ratios based on the provided data:
1. Inventory Turnover:
- In 2020, the inventory turnover was 2.78, indicating that the company turned over its inventory approximately 2.78 times during the year.
- The ratio improved in 2021 to 3.18, suggesting more efficient management of inventory.
- However, it decreased slightly in 2022 and 2024, indicating a slower rate of inventory turnover.
- Overall, Illumina Inc's inventory turnover has shown some fluctuations but remains within a moderate range.
2. Receivables Turnover:
- The receivables turnover indicates how quickly the company collects its receivables.
- Illumina Inc's receivables turnover ranged from 5.95 to 6.98 over the years, reflecting a relatively stable collection process.
- The slight decrease in 2024 to 5.95 may indicate a longer time taken to collect receivables compared to previous years.
3. Payables Turnover:
- Payables turnover reflects how quickly a company pays its suppliers.
- Illumina Inc's payables turnover varied significantly, from 4.13 to 7.18, indicating changes in payment terms with suppliers.
- The highest turnover in 2023 suggests a faster payment cycle, while the lowest in 2021 indicates a slower payment cycle.
4. Working Capital Turnover:
- Working capital turnover measures how effectively a company generates revenue with its working capital.
- Illumina Inc's working capital turnover increased substantially from 2020 to 2022, indicating improved efficiency in utilizing working capital.
- The ratio slightly decreased in 2023 and 2024, implying a slightly lower revenue generated per unit of working capital.
In summary, Illumina Inc's activity ratios show fluctuations in inventory turnover, relatively stable receivables turnover, significant variation in payables turnover, and improvements in working capital turnover. These ratios provide valuable insights into the company's operational efficiency and management of assets and liabilities.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 132.13 | 121.74 | 128.61 | 114.66 | 131.06 |
| Days of sales outstanding (DSO) | days | 61.36 | 59.48 | 53.43 | 52.26 | 54.88 |
| Number of days of payables | days | 53.39 | 50.81 | 66.34 | 88.32 | 67.64 |
Illumina Inc's activity ratios indicate the efficiency with which the company manages its inventory, receivables, and payables.
1. Days of Inventory on Hand (DOH):
- Illumina's Days of Inventory on Hand decreased from 131.06 days in December 2020 to 114.66 days in December 2021, suggesting improved inventory management.
- However, DOH increased to 128.61 days by December 2022 before decreasing again to 121.74 days in December 2023 and increasing to 132.13 days in December 2024. This fluctuation may indicate challenges in managing inventory levels consistently.
2. Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding decreased from 54.88 days in December 2020 to 52.26 days in December 2021, indicating a faster collection of receivables.
- However, DSO slightly increased to 53.43 days by December 2022 and rose further to 59.48 days in December 2023 and 61.36 days in December 2024. The increasing trend may suggest potential delays in collecting sales proceeds.
3. Number of Days of Payables:
- The Number of Days of Payables increased significantly from 67.64 days in December 2020 to 88.32 days in December 2021, indicating a longer period taken to pay suppliers.
- Subsequently, the Days of Payables decreased to 66.34 days by December 2022, 50.81 days in December 2023, and 53.39 days in December 2024. This decreasing trend may indicate more efficient management of payables.
In summary, Illumina Inc should focus on maintaining optimal inventory levels, improving receivables management to reduce DSO, and continuing to efficiently manage payables to enhance overall operational performance.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.36 | 4.47 | 4.20 | 4.42 | 3.51 |
| Total asset turnover | 0.69 | 0.45 | 0.37 | 0.30 | 0.43 |
Illumina Inc's long-term activity ratios indicate the efficiency of the company in utilizing its assets. The fixed asset turnover improved steadily from 3.51 in 2020 to 5.36 in 2024, signaling that the company generated more sales relative to its fixed assets over the years. This suggests that Illumina has been effectively utilizing its fixed assets to drive revenue growth.
On the other hand, the total asset turnover ratio fluctuated, declining from 0.43 in 2020 to 0.30 in 2021, then gradually increasing to 0.69 in 2024. The overall trend indicates a recovery and improvement in utilizing total assets to generate revenue. This shows that Illumina has become more efficient in generating sales relative to its total asset base over the years.
Overall, a higher fixed asset turnover ratio indicates efficient utilization of fixed assets, while a higher total asset turnover ratio signifies effective utilization of total assets in generating sales. The upward trend in both ratios over the years reflects improved operational efficiency and indicates positive growth prospects for Illumina Inc in the long term.