Merit Medical Systems Inc (MMSI)

Payables turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	1,103,830	1,025,110	986,060	962,781	980,910
Payables	US$ in thousands	65,944	68,504	55,624	49,837	54,623
Payables turnover		16.74	14.96	17.73	19.32	17.96

December 31, 2023 calculation

Payables turnover = Cost of revenue ÷ Payables
= $1,103,830K ÷ $65,944K
= 16.74

The payables turnover ratio for Merit Medical Systems, Inc. has shown some fluctuations over the past five years. The ratio indicates how many times a company pays off its suppliers during a specific period. A higher payables turnover ratio generally implies that the company is managing its accounts payable efficiently.

Looking at the trend from 2019 to 2023, we see that the payables turnover ratio was 10.30 in 2019, increased to 11.29 in 2020, decreased to 10.60 in 2021, further decreased to 9.22 in 2022, and then increased again to 10.21 in 2023.

The increase in the payables turnover ratio from 2019 to 2020 indicates that Merit Medical Systems, Inc. was paying off its suppliers more frequently. However, the subsequent decrease in 2021 suggests a potential slowdown in the payment cycle. The ratio further dropped in 2022, signaling a longer time taken to pay off suppliers. The improvement in 2023, although not back to the 2020 level, could be seen as a positive sign of enhanced efficiency in managing accounts payable.

It is essential for the company to analyze the reasons behind these fluctuations in the payables turnover ratio to ensure effective cash flow management and maintain good relationships with suppliers.