Inspire Medical Systems Inc (INSP)

Short-term

Turnover ratios

Inspire Medical Systems Inc's activity ratios provide insights into the efficiency of the company's operations.

1. Inventory Turnover: The inventory turnover ratio measures how many times a company's inventory is sold and replaced over a certain period. Inspire's inventory turnover has shown fluctuation over the years, but there has been a general trend of improvement, indicating better management of inventory levels and faster sales.

2. Receivables Turnover: The receivables turnover ratio reflects how efficiently a company is collecting payments from its customers. Inspire's receivables turnover has shown some variability but has generally trended upwards, suggesting improved collection efforts and more efficient management of accounts receivable.

3. Payables Turnover: The payables turnover ratio indicates how quickly a company pays its suppliers. Inspire's payables turnover has shown fluctuations, with some periods of increase and decrease. A higher payables turnover could suggest improved negotiation with suppliers but could also indicate potential liquidity challenges.

4. Working Capital Turnover: The working capital turnover ratio measures how effectively a company is utilizing its working capital to generate sales. Inspire's working capital turnover has generally increased over the years, indicating that the company is utilizing its working capital more efficiently to support sales growth.

Overall, the analysis of Inspire Medical Systems Inc's activity ratios indicates improvements in inventory turnover, receivables turnover, and working capital turnover, which are positive signs of operational efficiency and effective management of resources. However, the fluctuations in payables turnover may warrant further investigation to understand the underlying reasons and implications for the company's financial health.

---

Average number of days

Days of Inventory on Hand (DOH):

Inspire Medical Systems Inc's DOH has experienced fluctuations over the years. The company's inventory turnover has improved from 53.17 days as of March 31, 2020, to 11.16 days as of December 31, 2022. This indicates that the company has been managing its inventory efficiently, reducing the number of days it takes for inventory to be sold.

However, there was a slight increase in DOH to 44.36 days by December 31, 2024, which may suggest a slower turnover of inventory at the end of the period. The increase in DOH could be a result of changes in demand patterns, supply chain disruptions, or potential issues in inventory management.

Days of Sales Outstanding (DSO):

Inspire Medical Systems Inc's DSO reveals the number of days the company takes to collect revenue from its sales. The trend in DSO shows a decreasing pattern from 46.49 days as of March 31, 2020, to 42.31 days by December 31, 2024. This indicates an improvement in the company's collection efficiency over the years.

The lower DSO suggests that the company has been able to collect payments from customers more quickly, which is a positive signal for the company's cash flow management and liquidity position.

Number of Days of Payables:

The number of days of payables reflects the average number of days it takes for a company to pay its suppliers. Inspire Medical Systems Inc's payables days have varied during the period under review, ranging from 15.96 days as of September 30, 2021, to 29.90 days as of March 31, 2023.

An increase in the number of days of payables could indicate that the company is taking longer to settle its obligations to suppliers. This could be a strategic move to manage cash flow or may signal challenges in supplier relationships.

Overall, monitoring and managing these activity ratios are crucial for assessing the company's efficiency in managing its inventory, collecting receivables, and paying its obligations timely.

---

Long-term

Inspire Medical Systems Inc's long-term activity ratios provide insights into how efficiently the company is utilizing its assets to generate sales.

1. Fixed Asset Turnover: This ratio measures the company's ability to generate sales from its fixed assets. The trend shows a decline from 27.83 in March 2020 to 11.16 in December 2024. Although there are fluctuations within the period, the decreasing trend indicates a decrease in the efficiency of utilizing fixed assets to generate revenue.

2. Total Asset Turnover: This ratio indicates how effectively the company is using its total assets to generate revenue. The trend demonstrates improvement from 0.52 in March 2020 to 0.99 in December 2024, with some fluctuations in between. The increasing trend suggests an enhancement in the company's efficiency in generating sales relative to its total assets over time.

In conclusion, while the fixed asset turnover ratio for Inspire Medical Systems Inc has decreased significantly over the period, the total asset turnover ratio has shown a positive trend, indicating an overall improvement in utilizing total assets efficiently to generate revenue. However, the company may need to focus on optimizing its fixed asset utilization to enhance its financial performance in the long term.