Leidos Holdings Inc (LDOS)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 42.56 | 42.90 | 42.78 | 38.26 | 132.58 |
| Receivables turnover | 6.36 | 6.13 | 6.28 | 5.75 | 6.40 |
| Payables turnover | 17.93 | 16.80 | 16.94 | 14.45 | 16.12 |
| Working capital turnover | 15.21 | — | 35.22 | 28.47 | 23.16 |
Activity ratios are key financial metrics used to evaluate a company's operational efficiency and effectiveness in managing its assets and liabilities. Let's analyze the activity ratios of Leidos Holdings Inc over the past five years based on the provided data:
1. Inventory Turnover:
Leidos Holdings Inc has maintained a consistently high inventory turnover ratio, indicating the company's ability to efficiently sell its inventory. The ratio has ranged from 38.26 to 132.58 over the period, with an average of approximately 61.22. This suggests that the company is effectively managing its inventory levels and quickly converting them into sales.
2. Receivables Turnover:
The receivables turnover ratio measures how efficiently the company collects outstanding payments from its customers. Leidos Holdings Inc has shown a relatively stable receivables turnover ratio over the years, ranging from 5.75 to 6.40. This indicates that the company has been successful in converting credit sales into cash within a reasonable timeframe.
3. Payables Turnover:
The payables turnover ratio reflects how effectively the company pays its suppliers and creditors. Leidos Holdings Inc has demonstrated an increasing trend in payables turnover, with the ratio improving from 14.45 to 17.93. This suggests that the company is managing its payables efficiently by making timely payments to suppliers.
4. Working Capital Turnover:
The working capital turnover ratio measures how efficiently the company generates revenue relative to its working capital. Leidos Holdings Inc has shown fluctuations in its working capital turnover ratio, with values ranging from 15.21 to 35.22. The substantial increase in 2021 indicates an improvement in revenue generation relative to the company's working capital.
In summary, Leidos Holdings Inc has exhibited strong operational efficiency based on its activity ratios, with effective management of inventory, receivables, payables, and working capital. The company's ability to maintain high turnover ratios reflects its operational effectiveness and prudent financial management practices.
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 | 8.58 | 8.51 | 8.53 | 9.54 | 2.75 |
| Days of sales outstanding (DSO) | days | 57.43 | 59.58 | 58.16 | 63.43 | 57.05 |
| Number of days of payables | days | 20.36 | 21.73 | 21.55 | 25.27 | 22.64 |
The activity ratios of Leidos Holdings Inc provide insights into how efficiently the company manages its inventory, receivables, and payables.
1. Days of inventory on hand (DOH) measures how many days it takes for the company to sell its inventory. A decreasing trend in DOH from 9.54 days in 2020 to 8.58 days in 2023 indicates that the company has improved its inventory management efficiency over the years.
2. Days of sales outstanding (DSO) reflects the average number of days it takes for the company to collect payment after making a sale. The fluctuating trend in DSO from 57.05 days in 2019 to 63.43 days in 2020, and then decreasing to 57.43 days in 2023, suggests variations in the company's collection practices. Overall, the lower DSO in 2023 indicates an improvement in the company's ability to collect receivables efficiently.
3. Number of days of payables indicates how long the company takes to pay its suppliers. A decreasing trend in the number of days of payables from 25.27 days in 2020 to 20.36 days in 2023 suggests that Leidos Holdings Inc is paying its suppliers more quickly. However, it is important to note that paying suppliers too quickly may strain cash flow.
In conclusion, Leidos Holdings Inc has shown improvements in managing its inventory and collections efficiently over the years. The decreasing DOH and DSO ratios indicate enhanced operational efficiency, while the reduction in payables days shows the company's commitment to managing its payables effectively.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 17.70 | 17.91 | 20.50 | 20.36 | 38.66 |
| Total asset turnover | 1.22 | 1.10 | 1.04 | 0.98 | 1.18 |
Leidos Holdings Inc has displayed consistent efficiency in generating revenue relative to its fixed assets over the past five years, with fixed asset turnover ranging from 17.70 to 38.66. This indicates that the company is effectively utilizing its fixed assets to generate sales.
In terms of total asset turnover, Leidos Holdings Inc's performance has varied over the same period, from 0.98 to 1.22. The total asset turnover ratio measures the efficiency of the company in generating sales revenue in relation to its total assets.
Overall, the company's long-term activity ratios suggest a strong operational efficiency and effective utilization of both fixed and total assets to generate revenues. However, fluctuations in the total asset turnover ratio indicate some variability in the company's ability to generate sales relative to its total asset base over the years.