Incyte Corporation (INCY)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.05 | 4.93 | 5.41 | 8.00 | 10.02 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | 2.33 | 0.75 | 0.88 | 1.33 | 1.37 |
| Working capital turnover | 1.08 | 1.16 | 1.32 | 1.54 | 1.10 |
Incyte Corp.'s activity ratios provide insights into how effectively the company manages its assets and liabilities to generate sales and operate efficiently.
1. Inventory Turnover:
- The inventory turnover ratio has been gradually decreasing from 10.02 in 2019 to 4.05 in 2023. This indicates that in recent years, the company has been holding onto its inventory for a longer period before selling it. A lower inventory turnover may suggest potential issues with inventory management or challenges in selling products efficiently.
2. Receivables Turnover:
- Incyte Corp.'s receivables turnover has fluctuated over the years, ranging from 4.85 in 2021 to 6.99 in 2019. This ratio measures how quickly the company collects payments from its customers. The decreasing trend in the receivables turnover ratio may imply that the company is taking longer to collect outstanding receivables, potentially impacting its cash flow.
3. Payables Turnover:
- The payables turnover ratio has been inconsistent over the years, reaching a high of 2.33 in 2023 and a low of 0.75 in 2022. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently. The fluctuation in this ratio suggests variations in the company's payment policies and relationships with suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio has been relatively stable, with a slight decrease from 1.54 in 2020 to 1.09 in 2023. This ratio measures how efficiently the company's working capital is being utilized to generate revenue. A lower ratio may indicate that the company is less efficient in using its working capital to support sales activities.
Overall, Incyte Corp.'s activity ratios reflect trends in its inventory management, accounts receivable collection, payment practices, and working capital efficiency. It is important for the company to monitor these ratios closely to identify areas for improvement in its operational processes and financial performance.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 90.14 | 74.05 | 67.45 | 45.65 | 36.42 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | 156.89 | 489.40 | 416.05 | 274.50 | 267.23 |
Incyte Corp.'s activity ratios provide insights into the efficiency of its operations in managing inventory, collecting receivables, and paying suppliers over the past five years.
1. Days of Inventory on Hand (DOH):
- Incyte Corp.'s DOH has been increasing steadily over the years, indicating that the company is holding inventory for a longer period before it is sold.
- The increase in DOH from 36.42 days in 2019 to 90.14 days in 2023 suggests a less efficient management of inventory, potentially tying up more capital in unsold goods.
2. Days of Sales Outstanding (DSO):
- Incyte Corp.'s DSO has shown fluctuations over the years, with a peak in 2021 followed by a slight decrease in 2023.
- The DSO indicates the average number of days it takes for the company to collect revenue from its customers after a sale, with lower values being more favorable.
3. Number of Days of Payables:
- The number of days of payables for Incyte Corp. has exhibited significant variability, with a notable decrease from 489.40 days in 2022 to 156.89 days in 2023.
- A decreasing trend in days of payables suggests that the company is paying its suppliers more promptly, which could be due to improved cash management or renegotiation of payment terms.
Overall, Incyte Corp.'s activity ratios reflect mixed performance in managing inventory, collecting receivables, and paying suppliers. The company may need to focus on optimizing inventory levels, improving collections from customers, and maintaining healthy relationships with suppliers to enhance operational efficiency and liquidity.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.91 | 4.59 | 4.13 | 4.77 | 5.72 |
| Total asset turnover | 0.54 | 0.58 | 0.61 | 0.75 | 0.63 |
Incyte Corp.'s long-term activity ratios indicate the efficiency with which the company is utilizing its assets to generate revenue.
The fixed asset turnover ratio has been relatively stable over the past five years, ranging from 4.29 to 6.03. This ratio indicates that for every dollar invested in fixed assets, the company is generating between $4.29 and $6.03 in sales. A higher fixed asset turnover ratio implies better utilization of fixed assets to generate revenue.
On the other hand, the total asset turnover ratio has been decreasing over the years, from 0.75 in 2020 to 0.54 in 2023. This ratio signifies the company's ability to generate revenue for every dollar of total assets. The decline in total asset turnover could indicate potential inefficiencies in asset utilization or a shift in the company's business model.
Overall, while Incyte Corp. has maintained a relatively healthy fixed asset turnover ratio, the declining trend in the total asset turnover ratio warrants further investigation into the company's asset management strategies and operational efficiency.