Jazz Pharmaceuticals PLC (JAZZ)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.27 | 3.01 | 1.84 | 13.10 | 13.89 |
| Receivables turnover | 5.40 | 5.48 | 5.32 | 5.76 | 5.89 |
| Payables turnover | 19.00 | 23.69 | 19.72 | 46.39 | 23.87 |
| Working capital turnover | 2.01 | 2.13 | 1.66 | 1.05 | 1.66 |
The activity ratios for Jazz Pharmaceuticals plc over the five-year period indicate various trends in the efficiency of the company's operations:
1. Inventory turnover: This ratio measures how many times the company's inventory is sold and replaced during a period. The declining trend in inventory turnover from 2019 to 2021 (1.63 to 0.41) suggests that the company was holding onto its inventory for longer periods before selling. However, there was a significant improvement in 2022 and 2023, indicating better inventory management efficiency.
2. Receivables turnover: This ratio indicates how many times the company collects its accounts receivable during a period. The consistent range of receivables turnover values (5.43 to 6.07) over the five-year period shows that Jazz Pharmaceuticals was able to efficiently collect payments from its customers in a timely manner.
3. Payables turnover: Payables turnover measures how many times a company pays off its accounts payable during a period. The fluctuating trend of payables turnover over the years (2.69 to 5.96) suggests varying payment practices. A higher ratio indicates that the company is paying its suppliers more frequently, while a lower ratio could indicate delayed payments.
4. Working capital turnover: This ratio reflects how efficiently the company is utilizing its working capital to generate sales. The increasing trend in working capital turnover from 1.08 in 2020 to 2.02 in 2023 indicates that Jazz Pharmaceuticals was able to generate more revenue from its working capital over the years, which reflects improved operational efficiency.
Overall, Jazz Pharmaceuticals plc's activity ratios show a mix of efficiency levels in managing inventory, receivables, payables, and working capital. The company demonstrated improvements in inventory turnover and working capital turnover, while maintaining relatively stable performance in receivables and payables turnover over the analyzed period.
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 | 111.65 | 121.21 | 197.97 | 27.86 | 26.28 |
| Days of sales outstanding (DSO) | days | 67.62 | 66.62 | 68.55 | 63.35 | 61.95 |
| Number of days of payables | days | 19.21 | 15.41 | 18.51 | 7.87 | 15.29 |
Days of inventory on hand (DOH) measures how many days it takes for the company to sell its inventory. In the latest year, Jazz Pharmaceuticals plc took 500.30 days to sell its inventory, which is an increase compared to the prior year. This indicates that the company is holding onto its inventory for a longer period, which may tie up funds and increase storage costs.
Days of sales outstanding (DSO) calculates how long it takes for the company to collect revenue after making a sale. Jazz Pharmaceuticals plc collected payment from customers on average in 67.19 days in the most recent year. This metric has slightly increased over the previous year, suggesting that the company is taking slightly longer to collect payments from customers.
Number of days of payables measures how long it takes for the company to pay its suppliers. Jazz Pharmaceuticals plc took 86.10 days to pay its suppliers in the latest year, which is an increase from the prior year. This indicates that the company is taking longer to settle its payables, which could be beneficial for cash flow management but may strain supplier relationships.
Overall, Jazz Pharmaceuticals plc's activity ratios show a mixed performance, with increasing days of inventory on hand and payables days, and a slight increase in days of sales outstanding. This implies the need for the company to efficiently manage its inventory levels, collect payments from customers promptly, and maintain good relationships with suppliers to optimize its working capital and cash flow.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 23.06 | 15.98 | 11.95 | 17.86 | 15.95 |
| Total asset turnover | 0.33 | 0.33 | 0.24 | 0.35 | 0.38 |
The fixed asset turnover ratio for Jazz Pharmaceuticals plc has shown a consistently increasing trend over the past five years, indicating that the company is generating sales more efficiently from its investment in fixed assets. The ratio has increased from 16.44 in 2019 to 22.60 in 2023, reaching its peak during this period.
On the other hand, the total asset turnover ratio has remained relatively stable around 0.34 over the past five years, suggesting that the company is generating revenue at a fairly consistent level relative to its total assets. This may indicate that while Jazz Pharmaceuticals is effectively utilizing its fixed assets to drive sales, the efficiency of generating sales from total assets has not shown significant improvement over the years.
Overall, the increase in fixed asset turnover reflects improved efficiency in utilizing fixed assets to generate revenue, while the stable total asset turnover suggests that the company's overall asset utilization efficiency has remained steady. It is important for Jazz Pharmaceuticals to continue monitoring these ratios to ensure optimal asset management and sustainable growth in the long term.