Iridium Communications Inc (IRDM)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company is managing its assets and liabilities to generate revenue.

1. Inventory turnover:
- Iridium Communications' inventory turnover has been fluctuating over the past five years, ranging from 2.47 to 5.18. This ratio indicates the number of times inventory is sold and replaced within a given period. A higher ratio suggests better inventory management and faster turnover.

2. Receivables turnover:
- The receivables turnover ratio for Iridium Communications has also varied over time, with values between 8.16 and 9.69. This ratio reflects how efficiently the company collects outstanding payments from customers. A higher ratio indicates quicker collection of receivables, which can improve cash flow.

3. Payables turnover:
- Iridium Communications' payables turnover ratio has shown a decreasing trend, dropping from 21.62 to 7.85 over the past five years. This ratio measures how quickly the company pays its suppliers. A lower ratio may indicate that the company is taking longer to settle its payables, which could affect relationships with suppliers.

4. Working capital turnover:
- The working capital turnover ratio for Iridium Communications has generally increased over the years, indicating better utilization of working capital to generate revenue. This ratio demonstrates how effectively the company is using its working capital to support business operations and sales.

In conclusion, analyzing these activity ratios provides valuable insights into Iridium Communications' operational efficiency, inventory management, receivables collection, payables settlement, and working capital utilization over the past five years.

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Average number of days

The activity ratios of Iridium Communications Inc provide insight into the efficiency of its operations and management of its working capital.

1. Days of Inventory on Hand (DOH):
- The DOH ratio measures the average number of days it takes for a company to sell its entire inventory.
- In the period from 2019 to 2023, Iridium's DOH has been gradually increasing, indicating a trend of potentially slower inventory turnover.
- This increase suggests that Iridium may be carrying excess inventory or facing challenges in selling its products efficiently.

2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects the average number of days it takes for a company to collect payments from its customers.
- Iridium's DSO has fluctuated over the years but has generally remained within a relatively stable range.
- The company's ability to collect payments within a reasonable timeframe indicates effective credit and collections management practices.

3. Number of Days of Payables:
- This ratio shows the average number of days it takes for a company to pay its suppliers.
- Iridium's number of days of payables has been increasing over the years, indicating that the company is taking longer to settle its payables.
- A longer period of payables may suggest that Iridium is managing its cash flow by delaying payments to suppliers.

In summary, while Iridium Communications Inc has maintained stable DSO and increased DOH and days of payables over the years, it may need to monitor its inventory management practices and ensure a balance in its working capital management to optimize operational efficiency.

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Long-term

The long-term activity ratios of Iridium Communications Inc reflect the company's efficiency in generating sales from its investment in fixed assets and total assets over the past five years.

The fixed asset turnover ratio has shown an improving trend, increasing from 0.18 in 2019 to 0.36 in 2023. This indicates that the company is generating more revenues relative to its investment in fixed assets. It implies that Iridium Communications Inc has been effectively utilizing its fixed assets to generate sales, which is a positive sign for the company's operational efficiency.

Similarly, the total asset turnover ratio has also shown a positive trend, increasing from 0.15 in 2019 to 0.30 in 2023. This indicates that the company is generating more revenue relative to its total assets, reflecting an improvement in how efficiently the company is utilizing all its assets to generate sales.

Overall, the increasing trends in both fixed asset turnover and total asset turnover ratios suggest that Iridium Communications Inc has been effectively managing and utilizing its assets to drive revenue growth, which is a favorable indication of the company's operational efficiency and effectiveness in capital allocation.