McKesson Corporation (MCK)

Activity ratios

Short-term

Turnover ratios

	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	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019
Inventory turnover	14.48	13.55	13.10	13.66	13.86	13.16	13.64	13.74	14.11	13.75	13.49	12.64	12.68	12.68	12.60	13.80	13.69	12.51	12.84	12.38
Receivables turnover	14.28	13.06	12.93	12.98	14.25	13.34	13.53	13.47	14.19	13.99	12.45	12.14	12.42	12.59	12.14	13.00	11.58	11.95	11.69	11.27
Payables turnover	6.49	6.39	6.14	6.37	6.42	6.44	6.61	6.75	6.93	7.04	6.71	6.59	6.26	6.67	6.41	6.90	6.16	6.50	6.45	6.04
Working capital turnover	—	—	—	—	—	—	—	—	—	—	—	—	186.26	542.51	—	2,817.27	—	—	1,067.32	456.84

The activity ratios for McKesson Corporation provide valuable insights into the efficiency of the company's operations.

1. Inventory turnover: McKesson Corporation shows a consistently high inventory turnover rate, averaging around 13.5 to 14.5 times per year. This implies that the company efficiently manages its inventory levels and sells its products quickly, reducing the risk of obsolete inventory.

2. Receivables turnover: The company's receivables turnover ratio indicates how quickly it collects payments from customers. McKesson Corporation maintains a consistent receivables turnover rate between 12 and 14 times per year, demonstrating effective credit management and collection practices.

3. Payables turnover: McKesson Corporation's payables turnover ratio reveals how efficiently the company pays its suppliers. The company maintains a stable payables turnover rate around 6 times per year, indicating a balanced approach to managing its accounts payable.

4. Working capital turnover: Although there is missing data for earlier periods, the provided figures for the working capital turnover ratio suggest that McKesson Corporation efficiently utilizes its working capital to generate sales revenue. The significant increase in the working capital turnover ratio in recent periods indicates an improvement in the company's operational efficiency and effective management of its working capital.

Overall, McKesson Corporation demonstrates strong operational efficiency based on its activity ratios, with consistently high inventory turnover, healthy receivables turnover, and effective management of payables.

Average number of days

		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	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019
Days of inventory on hand (DOH)	days	25.21	26.93	27.87	26.72	26.33	27.73	26.77	26.57	25.87	26.54	27.05	28.88	28.78	28.78	28.97	26.45	26.67	29.17	28.42	29.48
Days of sales outstanding (DSO)	days	25.56	27.96	28.24	28.11	25.62	27.37	26.98	27.09	25.72	26.10	29.32	30.06	29.39	29.00	30.06	28.07	31.51	30.55	31.21	32.37
Number of days of payables	days	56.26	57.11	59.42	57.29	56.82	56.69	55.22	54.09	52.68	51.88	54.44	55.38	58.28	54.69	56.96	52.89	59.28	56.11	56.58	60.40

The activity ratios of McKesson Corporation reflect its efficiency in managing inventory, accounts receivable, and accounts payable.

Days of Inventory on Hand (DOH) measures how long it takes for the company to sell its inventory. Over the past few quarters, McKesson has shown a relatively stable trend, ranging from 25.21 to 29.48 days. This indicates that the company has been effective in managing its inventory levels and converting it into sales within a reasonable timeframe.

Days of Sales Outstanding (DSO) measures how long it takes for the company to collect payment from its customers. McKesson has shown fluctuations in DSO, ranging from 25.62 to 32.37 days. A decreasing trend in DSO would signify faster collection of receivables, while an increasing trend could point to potential issues with credit policies or collection efficiency.

Number of Days of Payables measures how long it takes for the company to pay its suppliers. McKesson has maintained a stable range for this ratio, from 51.88 to 60.40 days. A higher number of days indicates that the company takes longer to pay its suppliers, potentially benefiting from a longer operating cycle.

Overall, McKesson Corporation appears to be efficiently managing its inventory, receivables, and payables, as evidenced by the relatively stable trends in these activity ratios over the past quarters. However, continued monitoring and analysis of these ratios are necessary to ensure optimal working capital management and operational efficiency.

Long-term

	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	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019
Fixed asset turnover	133.31	136.83	133.92	130.68	127.01	127.98	131.35	128.72	126.05	124.38	112.85	96.20	92.30	94.37	94.78	96.58	97.71	93.43	89.05	88.18
Total asset turnover	4.58	4.53	4.40	4.43	4.44	4.37	4.31	4.30	4.17	4.03	3.94	3.90	3.66	3.84	3.80	4.01	3.77	3.70	3.76	3.53

McKesson Corporation's long-term activity ratios indicate the efficiency with which the company is utilizing its fixed assets and total assets to generate revenue. The fixed asset turnover ratio has shown a generally increasing trend over the periods, reaching a high of 136.83 in December 2023, suggesting that the company is generating $136.83 in revenue for every $1 invested in fixed assets. This indicates a high level of efficiency in utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio has fluctuated over the periods but has remained relatively stable around the range of 4.03 to 4.58. This ratio indicates that McKesson Corporation is generating $4.03 to $4.58 in revenue for every dollar of total assets. The stable total asset turnover ratio suggests that the company is effectively utilizing its total assets to generate sales.

Overall, the increasing trend in fixed asset turnover and the stable total asset turnover ratio indicate that McKesson Corporation's long-term asset management strategies are efficiently driving sales growth and maximizing the utilization of its assets.