Medtronic PLC (MDT)
Activity ratios
Short-term
Turnover ratios
| Apr 30, 2024 | Apr 26, 2024 | Apr 30, 2023 | Apr 28, 2023 | Apr 30, 2022 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.15 | 4.68 | 2.03 | 4.42 | 2.20 |
| Receivables turnover | — | 5.38 | — | 5.26 | — |
| Payables turnover | — | 10.13 | — | 8.79 | — |
| Working capital turnover | 2.90 | 2.96 | 2.47 | 2.50 | 2.97 |
The activity ratios of Medtronic PLC provide insight into the company's efficiency in managing its operations and assets.
1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company sells its average inventory in a specific period.
- Medtronic's inventory turnover has shown fluctuations over the years. It increased from 2.20 in April 2022 to 4.68 in April 2024.
- Generally, a higher inventory turnover ratio indicates that the company is effectively managing its inventory by quickly selling off its products.
2. Receivables Turnover:
- The receivables turnover ratio analyzes how well a company is collecting on its credit sales.
- Medtronic's receivables turnover was not available for April 2022 and 2023 but stood at 5.38 in April 2024.
- A higher receivables turnover ratio signifies that the company is efficiently collecting payments from its customers, which is a positive sign for liquidity.
3. Payables Turnover:
- The payables turnover ratio indicates how efficiently a company pays its suppliers.
- Medtronic's payables turnover was not available for April 2022 and 2023 but increased to 10.13 in April 2024.
- A higher payables turnover ratio suggests that the company is managing its payables effectively, possibly taking advantage of credit terms from suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio shows how efficiently a company is utilizing its working capital to generate revenue.
- Medtronic's working capital turnover remained relatively stable around 2.5 to 3 over the period from April 2022 to April 2024.
- A higher working capital turnover ratio indicates that the company is efficiently using its working capital to support its operations and generate sales.
Overall, Medtronic PLC has shown improvements in its efficiency metrics over the years, as seen in the increasing inventory turnover and stable working capital turnover ratios, which reflect effective management of assets and operations.
Average number of days
| Apr 30, 2024 | Apr 26, 2024 | Apr 30, 2023 | Apr 28, 2023 | Apr 30, 2022 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 169.78 | 78.03 | 180.24 | 82.57 | 166.08 |
| Days of sales outstanding (DSO) | days | — | 67.86 | — | 69.44 | — |
| Number of days of payables | days | — | 36.04 | — | 41.53 | — |
The Days of Inventory on Hand (DOH) ratio measures how many days it takes for a company to sell its entire inventory. In the case of Medtronic PLC, we observe a declining trend in the DOH ratio from 166.08 days on April 30, 2022, to 78.03 days on April 26, 2024. This indicates an improvement in inventory turnover efficiency as the company reduced the number of days required to sell its inventory.
The Days of Sales Outstanding (DSO) ratio represents the average number of days it takes for a company to collect its accounts receivable. Medtronic PLC shows variability in its DSO ratio, with values of 69.44 days on April 28, 2023, and 67.86 days on April 26, 2024. This suggests that the company is managing its accounts receivable effectively, with a relatively stable collection period.
The Number of Days of Payables ratio signifies the average number of days it takes for a company to pay its suppliers. For Medtronic PLC, the days of payables show a decreasing trend from 41.53 days on April 28, 2023, to 36.04 days on April 26, 2024. This implies that the company is possibly negotiating more favorable payment terms with its suppliers to manage its cash flows efficiently.
Overall, the activity ratios for Medtronic PLC indicate an improvement in inventory turnover and effective management of accounts receivable and payables over the analyzed periods, reflecting sound operational efficiency within the company.
See also:
Long-term
| Apr 30, 2024 | Apr 26, 2024 | Apr 30, 2023 | Apr 28, 2023 | Apr 30, 2022 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | 5.38 | 4.72 | 5.66 | 5.85 |
| Total asset turnover | 0.36 | 0.37 | 0.34 | 0.35 | 0.35 |
The Fixed Asset Turnover ratio for Medtronic PLC has been relatively stable over the past five years, ranging from 4.72 to 5.85, with a slight decrease in 2023 followed by an increase in 2024. This indicates that the company is generating approximately $5.38 in revenue for every dollar invested in fixed assets in the most recent fiscal year.
Meanwhile, the Total Asset Turnover ratio has also remained relatively stable, ranging from 0.34 to 0.37 over the same period. This suggests that Medtronic PLC is generating approximately $0.36 in revenue for every dollar of total assets employed in its operations in the most recent fiscal year.
Overall, both ratios indicate that Medtronic PLC is efficiently utilizing its assets to generate revenue, with the Fixed Asset Turnover ratio showing the effectiveness of the company's utilization of fixed assets specifically, and the Total Asset Turnover ratio reflecting the overall efficiency of asset utilization in the business.