McKesson Corporation (MCK)

Activity ratios

Short-term

Turnover ratios

	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Inventory turnover	15.04	13.91	13.13	11.78	14.01	13.13	12.70	13.25	13.43	12.65	13.04	13.09	13.41	12.82	12.31	11.63	11.75	11.73	12.05	13.19
Receivables turnover	14.00	13.34	13.07	13.21	14.29	13.07	12.94	12.99	14.26	13.34	13.53	13.49	14.20	14.00	12.46	12.14	12.42	12.59	12.14	13.00
Payables turnover	6.25	6.67	5.95	5.82	6.29	6.19	5.96	6.18	6.22	6.19	6.32	6.43	6.59	6.56	6.12	6.06	5.80	6.17	6.13	6.60
Working capital turnover	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	186.26	542.51	—	2,817.10

The analysis of McKesson Corporation's activity ratios reveals the following trends:

1. Inventory Turnover:
- The inventory turnover ratio fluctuated over the periods but generally remained above 10. This indicates that McKesson effectively manages its inventory by efficiently selling and replacing its products.
- The ratio remained relatively stable around 13, indicating that McKesson is able to turn over its inventory approximately 13 times a year.

2. Receivables Turnover:
- The receivables turnover ratio indicates how efficiently McKesson collects its accounts receivable. The ratio remained relatively consistent around 13-14 over the periods.
- This consistency suggests that McKesson has a reliable and efficient system in place for collecting payments from customers.

3. Payables Turnover:
- The payables turnover ratio reflects how quickly McKesson pays its suppliers. The ratio fluctuated but generally remained between 5.8 and 6.7.
- McKesson's ability to maintain a steady payables turnover ratio indicates a balanced approach to managing its payables.

4. Working Capital Turnover:
- The working capital turnover ratio provides insights into how well McKesson utilizes its working capital to generate sales. The data shows significant fluctuations and missing values, indicating possible irregularities in working capital management.
- The missing data points suggest that McKesson may have shifted its focus away from working capital efficiency during those periods.

In conclusion, McKesson Corporation demonstrates sound efficiency in managing its inventory and receivables based on the stable turnover ratios. However, irregularities in the working capital turnover and payables turnover ratios suggest areas where the company may need to focus on optimizing its working capital management and payment processes.

Average number of days

		Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	24.27	26.24	27.80	31.00	26.05	27.79	28.73	27.55	27.19	28.86	27.99	27.88	27.21	28.47	29.64	31.39	31.07	31.10	30.29	27.67
Days of sales outstanding (DSO)	days	26.07	27.36	27.93	27.62	25.54	27.92	28.20	28.09	25.60	27.37	26.98	27.06	25.70	26.07	29.29	30.06	29.39	29.00	30.06	28.07
Number of days of payables	days	58.38	54.69	61.32	62.67	58.03	58.94	61.27	59.09	58.67	59.00	57.75	56.76	55.42	55.65	59.65	60.20	62.92	59.11	59.57	55.33

To analyze McKesson Corporation's activity ratios, we will look at three key metrics: 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 McKesson's DOH indicates the number of days it takes for the company to sell its inventory. The DOH has shown some fluctuations over the periods analyzed, ranging from a low of 24.27 days to a high of 31.39 days.
- McKesson has been able to effectively manage its inventory levels, with the DOH staying within a relatively stable range, indicating efficient inventory turnover.

2. Days of Sales Outstanding (DSO):
- The DSO metric represents the average number of days it takes for McKesson to collect payments from its customers. The trend in DSO has been relatively consistent, with fluctuations ranging from 25.54 days to 30.06 days.
- The lower the DSO, the better, as it indicates that the company is collecting receivables more quickly, improving its cash flow and liquidity position.

3. Number of Days of Payables:
- This metric shows how many days it takes for McKesson to pay its suppliers. The trend in the number of days of payables has shown variability, ranging from 54.69 days to 62.92 days.
- A higher number of days of payables may indicate that the company is taking longer to pay its suppliers, potentially improving its working capital position.

In summary, McKesson Corporation has demonstrated efficient management of its inventory levels, consistent collection of receivables, and varying payment terms with its suppliers. Monitoring these activity ratios helps assess the company's operating efficiency and cash flow management.

Long-term

	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Fixed asset turnover	—	—	—	—	—	—	75.59	130.77	127.11	127.99	75.17	72.93	126.18	124.52	62.91	53.08	92.30	94.37	94.78	96.57
Total asset turnover	4.78	4.85	4.56	4.38	4.58	4.53	4.40	4.43	4.44	4.37	4.31	4.31	4.17	4.03	3.95	3.90	3.66	3.84	3.80	4.01

The Fixed Asset Turnover ratio measures how efficiently a company utilizes its fixed assets to generate revenue. For McKesson Corporation, we observe fluctuations in the Fixed Asset Turnover ratio over the years. It decreased from around 96.57 in June 2020 to about 53.08 in June 2021, suggesting a decline in the efficiency of utilizing fixed assets during that period. However, from December 2021 onwards, the ratio started increasing significantly, reaching a peak of 130.77 in June 2023, indicating a substantial improvement in utilizing fixed assets efficiently.

On the other hand, the Total Asset Turnover ratio indicates the company's ability to generate sales from its total assets. For McKesson Corporation, the Total Asset Turnover ratio saw variations as well, but generally showed an increasing trend over the years. The ratio increased from approximately 4.01 in June 2020 to about 4.78 in March 2025, reflecting an improvement in generating sales from total assets.

Overall, analyzing both ratios together provides a comprehensive view of McKesson's long-term efficiency in managing and utilizing both fixed and total assets to generate revenue. The increase in both ratios towards the later years suggests that the company has been effectively utilizing its assets to drive sales and enhance overall operational performance.