Merit Medical Systems Inc (MMSI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.86 | 3.63 | 3.85 | 4.44 | 4.86 |
| Receivables turnover | 6.55 | 6.56 | 6.43 | 6.28 | 6.17 |
| Payables turnover | 17.27 | 16.74 | 14.96 | 17.73 | 19.32 |
| Working capital turnover | 1.92 | 1.37 | 3.71 | 4.35 | 3.89 |
The activity ratios of Merit Medical Systems Inc provide insights into the efficiency of the company's operations.
1. Inventory Turnover:
- The inventory turnover ratio measures how effectively the company manages its inventory. A decreasing trend in the inventory turnover ratio from 4.86 in 2020 to 3.86 in 2024 indicates that the company is taking longer to sell its inventory, which may lead to higher holding costs or potential issues with product demand.
2. Receivables Turnover:
- The receivables turnover ratio indicates how efficiently the company collects on its credit sales. Merit Medical Systems Inc has maintained a relatively stable receivables turnover ratio, ranging from 6.17 in 2020 to 6.55 in 2024, suggesting consistent collection practices and effective credit management.
3. Payables Turnover:
- The payables turnover ratio reflects how quickly the company pays its suppliers. A declining trend in the payables turnover ratio from 19.32 in 2020 to 17.27 in 2024 signals that Merit Medical Systems Inc is taking longer to settle its payables, which may indicate cash flow challenges or changes in payment terms with suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio assesses how efficiently the company utilizes its working capital to generate sales. A fluctuating trend in the working capital turnover ratio, from 3.89 in 2020 to 1.92 in 2024, indicates variations in the company's ability to generate revenue relative to its working capital levels, with a significant decline in 2023.
Overall, while the company has maintained stable receivables turnover and payables turnover ratios, the declining inventory turnover ratio and erratic working capital turnover ratio suggest potential challenges in inventory management and working capital utilization that may require further evaluation and strategic adjustments.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 94.44 | 100.48 | 94.71 | 82.15 | 75.07 |
| Days of sales outstanding (DSO) | days | 55.73 | 55.61 | 56.73 | 58.08 | 59.20 |
| Number of days of payables | days | 21.14 | 21.81 | 24.39 | 20.59 | 18.89 |
Based on the provided data on Merit Medical Systems Inc's activity ratios:
1. Days of Inventory on Hand (DOH):
- The number of days of inventory on hand has shown an increasing trend over the years from 75.07 days in December 2020 to 94.44 days in December 2024.
- A higher number of days of inventory on hand indicates that the company is holding onto its inventory for a longer period before selling it, which may tie up capital and increase holding costs.
2. Days of Sales Outstanding (DSO):
- The days of sales outstanding have decreased steadily from 59.20 days in December 2020 to 55.73 days in December 2024.
- A lower DSO suggests that the company is collecting accounts receivable more efficiently, improving its cash flow and liquidity.
3. Number of Days of Payables:
- The number of days of payables has slightly fluctuated over the years but has remained relatively stable, ranging from 18.89 days in December 2020 to 21.14 days in December 2024.
- A stable or increasing trend in days of payables suggests that the company is taking longer to pay its suppliers, potentially improving its cash conversion cycle and liquidity.
Overall, the analysis of Merit Medical Systems Inc's activity ratios indicates that while the company's inventory management could be more efficient, it has improved its accounts receivable collection and maintained stable payment practices to suppliers over the years.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.51 | 3.22 | 2.98 | 2.88 | 2.49 |
| Total asset turnover | 0.56 | 0.53 | 0.69 | 0.65 | 0.57 |
Long-term activity ratios provide insights into how efficiently a company is utilizing its assets to generate revenues. In the case of Merit Medical Systems Inc, the fixed asset turnover has been increasing steadily over the years, indicating that the company is generating more revenue from its fixed assets. This trend suggests that Merit Medical is becoming more efficient in utilizing its long-term assets to generate sales.
On the other hand, the total asset turnover ratio has shown some fluctuations with a slight decrease in 2023. This ratio measures the company's ability to generate sales from all its assets, including both fixed and current assets. The decrease in 2023 may indicate that Merit Medical's total asset efficiency dipped temporarily, but the ratio recovered in the subsequent year.
Overall, the increasing trend in fixed asset turnover coupled with the recovery in total asset turnover indicates that Merit Medical Systems Inc is effectively managing its long-term assets to drive revenue growth and optimize its asset utilization over the years.