Medtronic PLC (MDT)

Short-term

Turnover ratios

Medtronic PLC's inventory turnover has ranged from 2.20 to 3.76 over the analyzed period, indicating the number of times the company's inventory was sold and replaced during the period. The decreasing trend in inventory turnover suggests that the company may be facing challenges in managing its inventory efficiently.

The receivables turnover for Medtronic PLC varied from 5.09 to 5.82, showing how many times the company collected outstanding receivables during a period. The incomplete data points may suggest that the company's accounts receivable turnover could be inconsistent or affected by certain factors.

Regarding payables turnover, Medtronic PLC's performance ranged from 6.52 to 8.68, reflecting how quickly the company pays its suppliers. The stable performance in payables turnover indicates that the company has been managing its payables effectively over time.

Further, in terms of working capital turnover, Medtronic PLC's efficiency in generating revenue from its working capital fluctuated between 2.47 and 3.82. The trend in working capital turnover suggests slight variations in the company's ability to utilize its working capital efficiently to support its operations and generate sales.

Overall, a thorough analysis of these activity ratios provides insights into Medtronic PLC's operational efficiency and effectiveness in managing its inventory, receivables, payables, and working capital.

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Average number of days

Activity ratios are used to evaluate how efficiently a company is managing its resources. In the case of Medtronic PLC, we will analyze three key activity ratios: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

1. Days of Inventory on Hand (DOH):
- DOH measures how long it takes for the company to sell its inventory. A lower DOH indicates faster inventory turnover, which is generally more favorable.
- Over the period from April 30, 2022, to January 31, 2025, Medtronic's DOH ranged from a low of 97.15 days to a high of 166.21 days.
- The trend in DOH fluctuated over time, with the highest DOH observed in January 31, 2025.
- An increasing trend in DOH may suggest inefficiencies in inventory management or slowing sales.

2. Days of Sales Outstanding (DSO):
- DSO measures the average number of days it takes for the company to collect payments from its customers. A lower DSO is generally preferred as it indicates faster cash collection.
- Some periods do not have DSO data available, suggesting variability in reporting practices or data availability.
- The DSO for the available periods ranged from 62.70 days to 71.72 days.
- Lower DSO values indicate that Medtronic has been able to collect payments from customers more quickly during those periods.

3. Number of Days of Payables:
- This ratio reflects how long it takes the company to pay its suppliers. A higher number of days of payables suggests that the company takes longer to pay its suppliers.
- Medtronic's number of days of payables ranged from 45.52 days to 56.01 days during the analyzed periods.
- A higher number of days of payables can indicate favorable cash flow management as the company may be taking advantage of extended payment terms.

Overall, analyzing these activity ratios helps in understanding how efficiently Medtronic PLC is managing its inventory, accounts receivable, and accounts payable, which are crucial aspects of its operational performance and financial health.

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See also:

Medtronic PLC Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

Long-term activity ratios provide insights into how efficiently a company is utilizing its assets to generate sales.

1. Fixed Asset Turnover: This ratio measures how well a company is using its fixed assets to generate revenues. In the case of Medtronic PLC, the fixed asset turnover ratio fluctuated over the reporting periods, ranging from 5.38 to 5.97. The ratio indicates that, on average, Medtronic generated sales of approximately 5.38 to 5.97 times the value of its fixed assets. A higher ratio is generally favorable as it suggests higher efficiency in asset utilization.

2. Total Asset Turnover: This ratio assesses the company's ability to generate sales relative to its total assets. The total asset turnover ratio for Medtronic PLC ranged from 0.32 to 0.38. This indicates that, on average, the company generated sales equivalent to approximately 0.32 to 0.38 times its total assets. A higher ratio signifies better asset utilization efficiency.

Overall, both the fixed asset turnover and total asset turnover ratios demonstrate that Medtronic PLC has been effectively utilizing its assets to generate sales. However, fluctuations in these ratios over time may indicate changes in the company's asset management strategies and operational efficiency. Monitoring these ratios can help stakeholders assess the company's performance and efficiency in utilizing its assets to drive revenue growth.

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See also:

Medtronic PLC Long-term (Investment) Activity Ratios (Quarterly Data)