Eli Lilly and Company (LLY)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	2.53	2.89	2.90	2.91	3.14	3.68	3.52	3.68	3.71	3.51	3.57	3.48	2.99	2.74	2.83	3.03	3.03	3.24	3.37	3.74
Receivables turnover	3.01	3.09	3.22	3.07	4.14	3.51	3.79	3.76	4.24	3.95	3.87	3.83	4.18	3.97	3.97	3.63	4.91	3.94	3.88	4.18
Payables turnover	5.62	5.81	5.62	6.57	7.00	8.38	8.28	10.01	8.62	8.75	8.55	7.76	7.41	6.81	7.52	7.79	6.87	9.02	8.95	9.79
Working capital turnover	—	31.79	12.21	5.77	31.84	14.71	19.45	8.19	8.33	6.73	12.14	5.21	4.93	5.45	8.85	16.68	11.54	11.92	13.55	15.88

Lilly (Eli) & Co's activity ratios provide insights into the efficiency of the company's operations related to inventory, receivables, payables, and working capital turnover.

1. Inventory Turnover: The inventory turnover ratio has been decreasing over the quarters, from 1.54 in Q4 2022 to 1.23 in Q4 2023. This suggests that the company is selling its inventory at a slower pace, which could indicate potential issues with sales or excess inventory levels.

2. Receivables Turnover: The receivables turnover ratio has been relatively stable over the quarters, ranging from 3.01 to 3.51. This indicates that the company is efficient in collecting its accounts receivables, with a consistent performance in converting credit sales into cash.

3. Payables Turnover: The payables turnover ratio has shown some variability, decreasing from 5.24 in Q1 2022 to 2.73 in Q4 2023. A lower turnover ratio could indicate that the company is taking longer to pay its suppliers, which could impact relationships or indicate potential cash flow constraints.

4. Working Capital Turnover: The working capital turnover ratio, though volatile, shows a general trend of decreased efficiency in utilizing working capital over the quarters. The significant fluctuations, with a peak in Q3 2023 and a drop in Q4 2023, suggest that the company's investment in working capital might not be optimized for generating sales.

In conclusion, Lilly (Eli) & Co's activity ratios indicate areas of improvement in inventory management and working capital utilization, while also highlighting strengths in managing receivables efficiently. Management should closely monitor these ratios to ensure operational efficiency and identify opportunities for enhancement in the company's working capital management.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	144.35	126.50	126.00	125.24	116.34	99.12	103.61	99.07	98.50	104.02	102.22	105.01	121.96	133.35	128.90	120.33	120.63	112.52	108.27	97.49
Days of sales outstanding (DSO)	days	121.25	117.94	113.42	118.92	88.19	103.92	96.33	97.16	86.01	92.37	94.27	95.36	87.39	91.90	91.86	100.43	74.36	92.54	94.14	87.41
Number of days of payables	days	64.98	62.85	64.97	55.55	52.11	43.55	44.09	36.47	42.35	41.71	42.70	47.03	49.23	53.64	48.51	46.84	53.13	40.45	40.80	37.27

To analyze Lilly(Eli) & Co's activity ratios, we will look at their 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 for DOH shows an increase in the number of days it takes for the company to turn its inventory into sales from Q1 2022 to Q4 2023. This indicates that the company is holding more inventory for a longer period, which could tie up working capital and affect liquidity.

2. Days of Sales Outstanding (DSO):
- The trend for DSO also shows an increase in the number of days it takes for the company to collect its accounts receivable from Q1 2022 to Q4 2023. A rising DSO may indicate a potential issue with collecting receivables promptly, leading to cash flow challenges.

3. Number of Days of Payables:
- The trend for the number of days of payables indicates an increase in the time it takes for the company to pay its suppliers from Q1 2022 to Q4 2023. A longer payment period can benefit the company by conserving cash, but it may strain relationships with suppliers if not managed effectively.

Overall, the activity ratios suggest that Lilly(Eli) & Co's efficiency in managing inventory, collecting receivables, and paying suppliers has deteriorated over the period analyzed. This may have implications for the company's working capital management, cash flow, and relationships with both customers and suppliers.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	2.64	2.70	2.62	2.63	2.81	3.14	3.18	3.22	3.15	3.11	3.02	2.95	2.83	2.80	2.88	2.92	2.83	2.80	2.76	2.78
Total asset turnover	0.53	0.55	0.54	0.52	0.58	0.62	0.62	0.62	0.58	0.58	0.56	0.54	0.53	0.53	0.55	0.56	0.57	0.58	0.56	0.57

Lilly(Eli) & Co's fixed asset turnover has been relatively stable over the past eight quarters, ranging from 2.62 to 3.22. This ratio indicates that the company generates $2.62 to $3.22 in revenue for every dollar invested in fixed assets. A consistent fixed asset turnover ratio suggests that the company efficiently utilizes its fixed assets to generate sales. However, a decreasing trend from Q2 2022 to Q1 2022 may indicate a potential decrease in efficiency in utilizing fixed assets during this period.

On the other hand, Lilly(Eli) & Co's total asset turnover has also been consistent over the same period, ranging from 0.52 to 0.62. This ratio indicates that the company generates $0.52 to $0.62 in revenue for every dollar invested in total assets. A stable total asset turnover ratio suggests that the company efficiently utilizes both fixed and current assets to generate sales. However, the downward trend from Q4 2022 to Q1 2023 may suggest a reduction in overall asset efficiency during this period.

In summary, while Lilly(Eli) & Co has maintained relatively stable long-term activity ratios in terms of fixed asset turnover and total asset turnover, there are some fluctuations and trends that indicate potential changes in efficiency in utilizing assets to generate revenue. Further analysis and comparison with industry benchmarks may provide more insights into the company's operational performance and asset management strategies.