Merit Medical Systems Inc (MMSI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.63 | 3.85 | 4.44 | 4.86 | 4.35 |
| Receivables turnover | 6.56 | 6.43 | 6.28 | 6.17 | 5.94 |
| Payables turnover | 16.74 | 14.96 | 17.73 | 19.32 | 17.96 |
| Working capital turnover | 1.37 | 3.71 | 4.35 | 3.89 | 3.60 |
Activity ratios provide insight into how effectively a company is managing its assets and liabilities to generate revenue. Looking at Merit Medical Systems, Inc.'s activity ratios, we can observe trends over the past five years:
1. Inventory turnover: The inventory turnover ratio has been declining from 2.49 in 2019 to 2.22 in 2023. This indicates that the company is selling its inventory less frequently, which may imply inefficient inventory management or slower sales.
2. Receivables turnover: The receivables turnover ratio has shown a slight increase over the years, from 5.90 in 2019 to 6.64 in 2023. This suggests that the company is collecting its receivables more quickly, which is a positive sign of efficient credit management.
3. Payables turnover: The payables turnover ratio fluctuated over the years, with a peak in 2020 at 11.29 and a decline to 10.21 in 2023. A higher payables turnover ratio indicates that the company is paying its suppliers more quickly, which could potentially strain cash flow.
4. Working capital turnover: The working capital turnover ratio has also shown fluctuations, with a notable decrease from 3.73 in 2022 to 1.39 in 2023. A lower working capital turnover ratio could suggest that the company is inefficiently using its working capital to generate revenue.
Overall, Merit Medical Systems, Inc. should closely monitor its activity ratios to ensure efficient management of its assets and liabilities, which can impact its profitability and liquidity in the long run.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 100.48 | 94.71 | 82.15 | 75.07 | 83.98 |
| Days of sales outstanding (DSO) | days | 55.61 | 56.73 | 58.08 | 59.20 | 61.43 |
| Number of days of payables | days | 21.81 | 24.39 | 20.59 | 18.89 | 20.33 |
Activity ratios provide insight into how efficiently a company is managing its assets, particularly inventory, receivables, and payables. Let's analyze Merit Medical Systems, Inc.'s activity ratios based on the data provided:
1. Days of Inventory on Hand (DOH):
DOH measures how many days, on average, inventory is held before being sold. A higher DOH indicates slower inventory turnover and potential issues with obsolete or excess inventory. Over the past five years, Merit Medical's DOH has shown fluctuation, increasing from 146.46 days in 2019 to 164.68 days in 2023. This suggests that the company may be experiencing challenges in efficiently managing its inventory levels. Further investigation into inventory control practices may be warranted.
2. Days of Sales Outstanding (DSO):
DSO reflects how long it takes on average for the company to collect its accounts receivable. A higher DSO could indicate credit or collection issues. Merit Medical's DSO has fluctuated slightly over the past five years, with a decreasing trend from 61.83 days in 2019 to 54.94 days in 2023. This decreasing trend suggests an improvement in the company's collection efficiency, indicating effective credit and collection management practices.
3. Number of Days of Payables:
This ratio measures how many days it takes for a company to pay its suppliers. A higher number of days indicates that the company is taking longer to pay its creditors, potentially indicating good cash flow management or the ability to negotiate favorable payment terms. Merit Medical's days of payables have varied over the years, with fluctuations but relatively stable trend. In 2023, the number of days of payables decreased to 35.74 days from 35.45 days in 2019. This suggests that Merit Medical is managing its payables efficiently, neither excessively delaying payments nor overburdening its liquidity.
In conclusion, Merit Medical Systems, Inc.'s activity ratios reveal mixed performance in managing inventory, improving accounts receivable collection, and maintaining efficient payables management. Further analysis and comparison with industry benchmarks would provide a more comprehensive understanding of the company's operational efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.22 | 2.98 | 2.88 | 2.49 | 2.59 |
| Total asset turnover | 0.53 | 0.69 | 0.65 | 0.57 | 0.56 |
The long-term activity ratios of Merit Medical Systems, Inc. provide insights into how effectively the company is utilizing its fixed assets and total assets to generate sales revenue over the years.
1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how efficiently the company is generating sales revenue from its investment in fixed assets.
- Merit Medical's fixed asset turnover ratio has shown a generally increasing trend from 2.63 in 2019 to 3.28 in 2023.
- This indicates that the company has been improving its ability to generate sales from its fixed assets over the years.
- A higher fixed asset turnover ratio may suggest better asset utilization and operational efficiency.
2. Total Asset Turnover:
- The total asset turnover ratio assesses the company's ability to generate sales relative to its total assets.
- Merit Medical's total asset turnover ratio has fluctuated over the years but has not shown a clear upward or downward trend.
- The ratio decreased from 0.57 in 2019 to 0.54 in 2023, indicating a decline in the efficiency of generating sales from total assets during this period.
- A lower total asset turnover ratio may imply that the company is not efficiently utilizing its assets to generate sales revenue.
In summary, Merit Medical Systems, Inc. has demonstrated an improvement in the efficiency of generating sales from fixed assets based on the increasing trend in the fixed asset turnover ratio. However, the fluctuation and slight decrease in the total asset turnover ratio suggest a need for the company to further optimize its use of total assets to enhance overall operational efficiency and revenue generation.