Leidos Holdings Inc (LDOS)

Short-term

Turnover ratios

Leidos Holdings Inc has shown improvement in its inventory turnover ratio over the years, increasing from 38.26 in 2020 to 44.01 in 2024. This indicates that the company is managing its inventory efficiently, with a higher turnover implying that the inventory is being sold and replenished at a faster rate.

The receivables turnover ratio has also been steadily increasing, from 5.75 in 2020 to 6.30 in 2024. This suggests that Leidos is collecting its accounts receivable more effectively, converting sales into cash more efficiently over time.

In terms of payables turnover, Leidos has been extending its payment periods to suppliers, with the ratio rising from 14.45 in 2020 to 19.67 in 2024. This may indicate improved cash management, as the company is taking longer to pay its creditors, potentially benefiting from better cash flow management.

The working capital turnover ratio has shown some fluctuations over the years, with a sharp increase from 2020 to 2021, then a decline in 2023 before rising again in 2024. This ratio reflects how efficiently the company is utilizing its working capital to generate sales. The fluctuations may indicate changing business conditions or strategic shifts in the utilization of working capital.

Overall, the activity ratios of Leidos Holdings Inc signal efficient management of inventory, receivables, and payables, with a focus on optimizing working capital turnover to support the company's operational activities and financial performance.

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Average number of days

Based on the provided data for Leidos Holdings Inc, we can analyze the company's activity ratios as follows:

1. Days of Inventory on Hand (DOH):
- The company's efficiency in managing inventory has improved over the years, as the number of days of inventory on hand has decreased from 9.54 days in December 2020 to 8.29 days in December 2024. This indicates that the company is selling its inventory at a faster rate, which is a positive sign for operational efficiency.

2. Days of Sales Outstanding (DSO):
- Leidos Holdings Inc has shown a consistent improvement in its collection process, with the number of days of sales outstanding declining from 63.43 days in December 2020 to 57.94 days in December 2024. A lower DSO indicates that the company is able to collect its accounts receivable more quickly, which improves cash flow and overall liquidity.

3. Number of Days of Payables:
- The company has been able to negotiate favorable payment terms with its suppliers, as indicated by a decreasing trend in the number of days of payables from 25.27 days in December 2020 to 18.56 days in December 2024. This means that Leidos Holdings Inc is taking longer to pay its suppliers, which can help improve cash flow and working capital management.

Overall, the trend in these activity ratios suggests that Leidos Holdings Inc has been effectively managing its inventory, accounts receivable, and accounts payable, leading to improved efficiency and liquidity over the years. The company's ability to optimize these operational aspects bodes well for its financial health and performance.

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Long-term

To analyze Leidos Holdings Inc's long-term activity ratios, we will focus on two key ratios: Fixed Asset Turnover and Total Asset Turnover.

1. Fixed Asset Turnover:
- The Fixed Asset Turnover ratio measures how effectively a company utilizes its fixed assets to generate revenue. A higher ratio indicates more efficient utilization of fixed assets.
- In the given data, we observe that the Fixed Asset Turnover ratio has remained relatively stable over the years. It increased slightly from 20.36 in 2020 to 20.50 in 2021, indicating a small improvement in efficiency.
- However, from 2022 onwards, the ratio experienced a slight decline, dropping to 17.70 by the end of 2023. This suggests that the company may be experiencing challenges in optimizing the use of its fixed assets to generate revenue.
- Despite the decline in 2023, the Fixed Asset Turnover rebounded slightly to 18.07 by the end of 2024. While it is an improvement from 2023, the ratio is still lower compared to the earlier years.

2. Total Asset Turnover:
- The Total Asset Turnover ratio measures the efficiency of a company in generating sales from its total assets. A higher ratio indicates effective utilization of assets.
- The data shows a consistent increase in the Total Asset Turnover ratio over the years, from 0.98 in 2020 to 1.27 by the end of 2024. This upward trend suggests that Leidos Holdings Inc has been improving its efficiency in generating sales from its total assets.
- The company's ability to generate more revenue per dollar of total assets signifies effective asset management and operational performance.
- The significant increase in the Total Asset Turnover ratio indicates that Leidos Holdings Inc has been successful in optimizing its asset utilization and increasing revenue generation over the years.

In summary, while Leidos Holdings Inc's Fixed Asset Turnover ratio fluctuated over the years, the Total Asset Turnover ratio demonstrated a consistent improvement. The company's ability to generate more sales from its total assets reflects efficient asset management practices, which could contribute to overall financial performance and long-term sustainability.