Mesa Laboratories Inc (MLAB)

Short-term

Turnover ratios

Based on the provided data for Mesa Laboratories Inc, let's analyze the activity ratios:

1. Inventory Turnover: This ratio indicates how efficiently a company manages its inventory. A higher ratio is usually better as it indicates that inventory is selling quickly. Mesa Laboratories Inc's inventory turnover has decreased from 4.20 in 2021 to 2.54 in 2024, showing a declining trend over the years, which could suggest potential inventory management issues or a slowdown in sales.

2. Receivables Turnover: This ratio shows how many times a company collects its accounts receivable during a period. A higher turnover implies efficient collection. Mesa Laboratories Inc's receivables turnover has fluctuated but generally remained stable, ranging from 4.47 in 2022 to 5.54 in 2024, suggesting consistent effectiveness in collecting receivables.

3. Payables Turnover: This ratio indicates how quickly a company pays its suppliers. A higher turnover may suggest good relationships with suppliers but could also indicate a risk of losing early payment discounts. Mesa Laboratories Inc's payables turnover has increased from 9.53 in 2022 to 13.73 in 2024, implying that the company is taking longer to pay its suppliers over the years.

4. Working Capital Turnover: This ratio measures how effectively a company utilizes its working capital to generate sales revenue. A higher turnover indicates efficient utilization of working capital. Mesa Laboratories Inc's working capital turnover has shown a positive trend, increasing from 0.50 in 2021 to 3.32 in 2024, highlighting an improvement in generating sales revenue relative to working capital.

In summary, Mesa Laboratories Inc has witnessed decreasing inventory turnover, stable receivables turnover, increasing payables turnover, and improving working capital turnover over the years. While improvements are seen in working capital turnover, management may need to address the declining inventory turnover and monitor the increasing payables turnover to ensure sustainable growth and efficiency in the company's operations.

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Average number of days

Based on the provided data, the analysis of Mesa Laboratories Inc's activity ratios reveals the following trends:

1. Days of Inventory on Hand (DOH):
- The DOH increased from 86.95 days as of March 31, 2021, to 148.08 days as of March 31, 2023, before decreasing to 143.80 days by March 31, 2024.
- This indicates that Mesa Laboratories Inc is holding inventory for a longer period before selling it, which may tie up capital and increase carrying costs. The recent decrease could suggest an improvement in inventory management efficiency.

2. Days of Sales Outstanding (DSO):
- The DSO increased from 64.82 days on March 31, 2021, to 81.63 days on March 31, 2022, before decreasing to 65.94 days by March 31, 2024.
- A higher DSO suggests that the company is taking longer to collect its accounts receivable, potentially indicating issues with credit policies or payment collection processes. The subsequent decrease is a positive sign of improved collection efficiency.

3. Number of Days of Payables:
- The number of days of payables decreased from 34.79 days as of March 31, 2021, to 26.22 days by March 31, 2023, before slightly increasing to 26.59 days as of March 31, 2024.
- A lower number of days of payables indicates that Mesa Laboratories Inc is paying its creditors more quickly. While this may strain liquidity, it can also reflect strong relationships with suppliers or favorable payment terms.

Overall, the fluctuations in Mesa Laboratories Inc's activity ratios suggest varying levels of efficiency in managing inventory, collecting receivables, and paying payables. Analyzing these ratios over time can provide insights into the company's operational effectiveness and working capital management.

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Long-term

The fixed asset turnover ratio for Mesa Laboratories Inc has shown a positive trend over the years, increasing from 6.09 in March 31, 2021 to 7.78 in March 31, 2023. This indicates that the company has been able to generate more revenue relative to its investment in fixed assets, reflecting efficient utilization of these assets to drive sales.

However, it is important to note that the data for March 31, 2024 and March 31, 2025 are not available, so the trend beyond 2023 cannot be accurately determined.

In terms of total asset turnover, Mesa Laboratories Inc has also demonstrated a growth in efficiency, with the ratio rising from 0.22 in March 31, 2021 to 0.48 in March 31, 2024. This suggests that the company has been successful in generating more revenue for each dollar invested in total assets. Unfortunately, data for March 31, 2025 is not available.

Overall, the improving trends in both fixed asset turnover and total asset turnover ratios indicate that Mesa Laboratories Inc has been effective in utilizing its assets to generate sales, potentially enhancing its overall financial performance and profitability.