Intuitive Surgical Inc (ISRG)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	3.59	4.25	5.53	4.59	4.35
Receivables turnover	6.74	6.95	7.63	7.04	7.10
Payables turnover	23.20	25.81	26.78	33.86	20.97
Working capital turnover	1.22	1.36	1.27	0.80	1.26

Intuitive Surgical Inc's activity ratios provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital.

The inventory turnover ratio has shown a declining trend over the past five years, indicating that the company takes longer to sell its inventory. This may suggest potential issues such as overstocking or challenges in selling products efficiently.

On the other hand, the receivables turnover ratio has been relatively stable, indicating that the company collects its accounts receivable efficiently. A higher ratio implies that the company is turning its accounts receivable into cash more quickly, which is generally positive for cash flow management.

The payables turnover ratio has also shown consistency over the years, with a moderate decline in 2020 but a subsequent increase. This ratio reflects how quickly the company pays its suppliers. A higher turnover ratio typically suggests that the company is managing its payables effectively and possibly taking advantage of credit terms.

The working capital turnover ratio has fluctuated over the years, with a notable increase in 2022 followed by a slight decrease. This ratio measures the efficiency of utilizing working capital to generate sales. A higher ratio indicates that the company is effectively using its working capital to support operations and generate revenue.

Overall, Intuitive Surgical Inc's activity ratios provide a mixed picture of its operational efficiency, with opportunities for improvement in inventory management while demonstrating satisfactory performance in managing receivables, payables, and working capital.

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	101.75	85.93	66.03	79.45	83.93
Days of sales outstanding (DSO)	days	54.16	52.51	47.85	51.83	51.38
Number of days of payables	days	15.73	14.14	13.63	10.78	17.41

Activity ratios are crucial for evaluating how efficiently a company manages its resources and operations. Let's analyze the activity ratios of Intuitive Surgical Inc using the provided data.

1. Days of Inventory on Hand (DOH):
- Intuitive Surgical Inc's DOH has been increasing over the past five years, indicating that the company is holding onto its inventory for a longer period. This may suggest inefficiencies in inventory management, potentially tying up capital and increasing carrying costs.

2. Days of Sales Outstanding (DSO):
- The DSO of Intuitive Surgical Inc has also shown an upward trend, implying that the company is taking longer to collect payments from its customers. This could be a sign of credit policy issues or difficulties in collecting receivables promptly.

3. Number of Days of Payables:
- The days of payables for Intuitive Surgical Inc have fluctuated over the years, but overall, the company seems to be taking longer to pay its suppliers. This could be a deliberate strategy to preserve cash or negotiate more favorable payment terms with vendors.

In summary, Intuitive Surgical Inc's activity ratios suggest areas that may require attention to improve efficiency in managing inventory, receivables, and payables. Monitoring and optimizing these ratios can help enhance the company's overall financial performance and liquidity.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	2.15	2.76	3.18	2.88	3.60
Total asset turnover	0.49	0.50	0.44	0.41	0.47

The fixed asset turnover ratio measures the efficiency of a company in generating revenues from its fixed assets. Intuitive Surgical Inc's fixed asset turnover has declined over the last five years from 3.52 in 2019 to 2.01 in 2023. This indicates that the company is generating less revenue per dollar of fixed assets invested, which could be a concern as it suggests a decrease in asset utilization efficiency.

On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from its total assets. Intuitive Surgical Inc's total asset turnover has fluctuated over the past five years, with a range of 0.39 to 0.48. A lower total asset turnover indicates that the company is less efficient in generating sales from its total assets.

In conclusion, Intuitive Surgical Inc's long-term activity ratios, particularly the fixed asset turnover and total asset turnover, have exhibited mixed trends over the past five years, with a general decline in efficiency in generating revenues from both fixed and total assets. This could suggest a need for the company to review its asset utilization strategies to improve efficiency and profitability.