LivaNova PLC (LIVN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.37 | 6.30 | 7.30 | 7.82 | 8.73 |
| Receivables turnover | 6.33 | 5.09 | 5.32 | 4.98 | 4.85 |
| Payables turnover | 13.47 | 11.52 | 12.72 | 12.17 | 13.66 |
| Working capital turnover | 1.66 | 1.67 | 1.65 | — | 2.24 |
LivaNova PLC's activity ratios provide insights into how efficiently the company manages its resources. The inventory turnover ratio declined from 8.73 in 2020 to 6.37 in 2024, indicating that the company takes longer to sell its inventory over the years. This could signal potential issues with demand forecasting or production inefficiencies.
On the other hand, the receivables turnover ratio improved from 4.85 in 2020 to 6.33 in 2024, showing that the company is collecting its receivables more quickly. This suggests effective credit management practices and timely collection of payments from customers.
The payables turnover ratio fluctuated over the years, with a peak of 13.66 in 2020 and a slight increase to 13.47 in 2024. This indicates that the company is taking longer to pay its suppliers, potentially indicating improved liquidity or negotiation power with suppliers.
The working capital turnover ratio decreased from 2.24 in 2020 to 1.66 in 2024, implying a decline in the efficiency of utilizing working capital to generate sales. This could point to increased investment in non-current assets or decreased sales relative to working capital.
Overall, the analysis of LivaNova PLC's activity ratios suggests areas of strength in receivables management but potential challenges in inventory turnover and working capital efficiency that may require further investigation and operational improvements.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 57.34 | 57.94 | 49.97 | 46.67 | 41.82 |
| Days of sales outstanding (DSO) | days | 57.64 | 71.76 | 68.62 | 73.24 | 75.20 |
| Number of days of payables | days | 27.09 | 31.67 | 28.70 | 29.98 | 26.72 |
To analyze LivaNova PLC's activity ratios, we will focus on the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.
1. Days of Inventory on Hand (DOH):
- The trend in the DOH for LivaNova PLC from 2020 to 2024 shows an increase from 41.82 days to 57.34 days. This indicates that the company has been holding inventory for a longer period, which may tie up cash and impact liquidity.
2. Days of Sales Outstanding (DSO):
- The DSO for LivaNova PLC decreased from 75.20 days in 2020 to 57.64 days in 2024. A declining DSO suggests that the company has been able to collect its receivables more quickly over the years, improving cash flow efficiency.
3. Number of Days of Payables:
- The Number of Days of Payables has fluctuated for LivaNova PLC, increasing from 26.72 days in 2020 to 31.67 days in 2023, before decreasing to 27.09 days in 2024. A higher number of days of payables can indicate that the company is taking longer to pay its suppliers, which could lead to strained supplier relationships.
Overall, the analysis of LivaNova PLC's activity ratios shows differing trends in managing inventory, collecting receivables, and paying suppliers. It is essential for the company to find a balance between these ratios to optimize working capital management and improve overall operational efficiency.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 7.18 | 7.10 | 6.62 | 6.16 | 5.46 |
| Total asset turnover | 0.49 | 0.45 | 0.42 | 0.42 | 0.37 |
LivaNova PLC's long-term activity ratios indicate an improvement in its operational efficiency over the years.
1. Fixed Asset Turnover: The company's fixed asset turnover ratio has shown a consistent increasing trend from 5.46 in 2020 to 7.18 in 2024. This indicates that LivaNova is generating more revenue from its fixed assets, reflecting effective management of its property, plant, and equipment for revenue generation.
2. Total Asset Turnover: The total asset turnover ratio has also shown a positive trend, increasing from 0.37 in 2020 to 0.49 in 2024. This indicates that the company is employing its total assets more efficiently to generate sales, which is a positive sign of operational effectiveness and asset utilization.
Overall, the increasing trend in both fixed asset turnover and total asset turnover ratios suggests that LivaNova PLC is utilizing its assets more efficiently, generating higher revenue in relation to its fixed and total assets over the years, which could positively impact its profitability and financial performance in the long term.