Iridium Communications Inc (IRDM)

Short-term

Turnover ratios

Iridium Communications Inc's activity ratios provide insights into the company's efficiency in managing its assets and liabilities.

1. Inventory turnover:
- The inventory turnover ratio measures how effectively the company is turning over its inventory during a specific period.
- Iridium's inventory turnover has been fluctuating over the years, with a peak of 3.51 in 2021 and a low of 1.59 in 2023.
- A higher ratio indicates that Iridium is selling its inventory more quickly, which can be positive for cash flow and avoiding obsolete inventory.

2. Receivables turnover:
- The receivables turnover ratio reflects how efficiently the company is collecting its accounts receivable.
- Iridium has maintained relatively stable receivables turnover ratios ranging from 8.41 to 9.69 from 2020 to 2024.
- A higher ratio suggests that the company is collecting its receivables faster.

3. Payables turnover:
- The payables turnover ratio evaluates how quickly the company is paying its suppliers.
- Iridium's payables turnover has shown some variability, with a notable increase to 8.90 in 2024.
- A higher payables turnover ratio may indicate that the company is paying its suppliers more promptly.

4. Working capital turnover:
- The working capital turnover ratio measures how efficiently the company is using its working capital to generate revenue.
- Iridium's working capital turnover has improved steadily from 2.49 in 2020 to 6.73 in 2024.
- An increasing ratio indicates that Iridium is generating more revenue per unit of working capital employed.

Overall, the trends in Iridium Communications Inc's activity ratios suggest improvements in managing inventory, collecting receivables, paying suppliers, and utilizing working capital efficiently over the years, which can contribute to the company's financial performance and operational effectiveness.

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Average number of days

Iridium Communications Inc's activity ratios provide insights into how efficiently the company manages its resources and operations.

1. Days of Inventory on Hand (DOH):
- The DOH indicates the number of days it takes for the company to sell its inventory.
- In 2020, Iridium had 129.49 days of inventory on hand, which decreased to 103.86 days in 2021, showing improved inventory management.
- However, the DOH increased to 229.08 days in 2023 before declining to 169.16 days in 2024, indicating fluctuating inventory management efficiency over the years.

2. Days of Sales Outstanding (DSO):
- DSO measures how long it takes the company to collect its accounts receivable.
- Iridium had 38.26 days of sales outstanding in 2020, which decreased slightly to 37.66 days in 2021, suggesting efficient accounts receivable management.
- The DSO increased in subsequent years, reaching 43.41 days by the end of 2024, indicating a longer collection period for sales.

3. Number of Days of Payables:
- This ratio measures how long it takes the company to pay its suppliers.
- Iridium had 57.37 days of payables in 2020, which remained relatively stable at 57.91 days in 2021 before increasing to 72.07 days in 2023.
- The number of days of payables decreased significantly to 41.03 days in 2024, indicating a more efficient payment process towards the end of the period.

Overall, these activity ratios suggest that Iridium Communications Inc's inventory management improved initially but faced challenges in later years. The collection period for sales extended over time, while the payment period to suppliers showed fluctuations. Further analysis and comparisons with industry benchmarks would provide a more comprehensive evaluation of the company's operational efficiency.

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Long-term

The fixed asset turnover ratio for Iridium Communications Inc has been gradually increasing over the years, from 0.20 in December 2020 to 0.40 in December 2024. This indicates that the company is generating more revenue relative to its investment in fixed assets, such as property, plant, and equipment.

Similarly, the total asset turnover ratio has also been on an upward trend, increasing from 0.17 in December 2020 to 0.31 in December 2024. This suggests that Iridium Communications Inc is becoming more efficient in generating sales in relation to its total assets.

Overall, the improving trend in both fixed asset turnover and total asset turnover ratios reflects positively on the company's operational efficiency and ability to generate revenue from its asset base over the long term.