Masimo Corporation (MASI)

Short-term

Turnover ratios

Masimo Corporation's activity ratios provide insights into how efficiently the company is managing its assets and liabilities.

1. Inventory Turnover:
- The inventory turnover ratio measures how many times during a period a company sells and replaces its inventory. Masimo's inventory turnover has increased steadily over the years, from 1.86 in 2020 to 4.67 in 2024. This indicates that Masimo is selling its inventory more frequently, which is generally a positive sign of efficient inventory management.

2. Receivables Turnover:
- The receivables turnover ratio reflects how quickly a company collects payments from its customers. Masimo's receivables turnover fluctuated significantly over the years, with a notable spike in 2022 and 2024. A high receivables turnover ratio suggests that Masimo is effectively managing its accounts receivable and collecting payments promptly.

3. Payables Turnover:
- The payables turnover ratio shows how efficiently a company is managing its trade payables. Masimo's payables turnover remained relatively stable, ranging from 5.70 in 2021 to 8.49 in 2024. A higher payables turnover ratio indicates that Masimo is paying its suppliers more quickly, which may signal good relationships and negotiating power with suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio measures how effectively a company utilizes its working capital to generate sales. Masimo's working capital turnover increased noticeably from 2020 to 2024, indicating that the company is efficiently using its working capital to drive revenue growth.

Overall, Masimo Corporation's improving inventory turnover, fluctuating receivables turnover, stable payables turnover, and increasing working capital turnover ratios suggest effective management of its assets and liabilities, leading to enhanced operational efficiency and financial performance over the years.

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Average number of days

The activity ratios of Masimo Corporation provide insights into how efficiently the company manages its inventory, receivables, and payables over the years.

1. Days of Inventory on Hand (DOH):
- The days of inventory on hand decreased from 196.69 days in 2020 to 78.12 days in 2024. This indicates that Masimo has been more efficient in managing its inventory levels, with a significant reduction over the years. The decreasing trend suggests that the company has improved its inventory turnover and may have better control over its inventory holding costs.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding fluctuated over the years, from 45.84 days in 2020 to 3.51 days in 2024. In 2022 and 2024, the DSO was remarkably low, indicating that Masimo has been efficient in collecting payments from customers. The decrease in DSO suggests improved accounts receivable management and faster collection cycles, which could positively impact the company's cash flow.

3. Number of Days of Payables:
- The number of days of payables ranged from 43.01 days in 2024 to 64.06 days in 2021. A lower number of days of payables indicates that Masimo is paying its suppliers more quickly, which can help maintain good relationships with vendors. The decreasing trend in payables days from 2021 to 2024 may suggest that the company is managing its payables more effectively or negotiating better terms with suppliers.

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Long-term

Masimo Corporation's fixed asset turnover has shown a generally positive trend over the years, improving from 4.20 in 2020 to 5.35 in 2024. This indicates that the company is generating more revenue relative to its investment in fixed assets.

In contrast, the total asset turnover has fluctuated slightly, with a decrease from 0.67 in 2020 to 0.65 in 2022, followed by an increase to 0.78 in 2024. Despite the fluctuations, the overall trend suggests that Masimo Corporation is becoming more efficient in utilizing its total assets to generate revenue, particularly evident in the improved turnover ratio in 2024.

Overall, the analysis of Masimo Corporation's long-term activity ratios indicates that the company has been effectively managing its assets to generate revenue, with both fixed asset turnover and total asset turnover showing positive trends over the years.