Monster Beverage Corp (MNST)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	4.18	3.98	5.01	7.08	6.09
Receivables turnover	5.93	6.17	6.18	6.89	7.77
Payables turnover	7.19	8.39	7.35	7.94	8.02
Working capital turnover	1.60	1.67	1.49	1.92	2.54

The activity ratios of Monster Beverage Corp. provide insights into the efficiency of its operations and management of working capital.

1. Inventory turnover:
- The company's inventory turnover has fluctuated over the past five years, ranging from 3.35 to 5.63.
- A higher inventory turnover indicates that the company is managing its inventory efficiently, turning over its inventory more quickly.
- The decrease in 2023 compared to 2022 suggests a potential slowdown in inventory management efficiency.

2. Receivables turnover:
- Monster Beverage Corp. has maintained a relatively stable receivables turnover ratio, indicating the speed at which the company collects its receivables.
- A higher receivables turnover ratio suggests that the company is effective in collecting payments from its customers.

3. Payables turnover:
- The payables turnover ratio of the company has varied over the years, with the highest ratio in 2022 and the lowest in 2021.
- A higher payables turnover ratio indicates that the company is paying its suppliers more frequently, potentially impacting cash flow and relationships with suppliers.

4. Working capital turnover:
- The working capital turnover ratio measures how effectively the company is using its working capital to generate sales.
- Monster Beverage Corp.'s working capital turnover has shown a decreasing trend over the years, indicating a declining ability to generate sales relative to its working capital.

Overall, Monster Beverage Corp. should focus on maintaining efficient inventory turnover, improving working capital utilization, and managing payables effectively to enhance its operational efficiency and financial performance.

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	87.40	91.67	72.88	51.58	59.89
Days of sales outstanding (DSO)	days	61.56	59.13	59.05	52.99	46.99
Number of days of payables	days	50.78	43.53	49.66	45.96	45.50

1. Days of Inventory on Hand (DOH):
- The Days of Inventory on Hand has increased gradually from 78.27 days in 2019 to 105.97 days in 2023.
- This indicates that, on average, Monster Beverage Corp. is holding onto its inventory for a longer period before it is sold.
- A high DOH ratio may suggest inefficiencies in managing inventory levels or potential issues with inventory turnover.

2. Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding has shown a slight fluctuation over the years, ranging from 46.95 days in 2019 to 61.04 days in 2023.
- This ratio reflects the average number of days it takes for the company to collect revenue after a sale is made.
- A higher DSO may indicate challenges in collecting accounts receivable efficiently, potentially impacting cash flow.

3. Number of Days of Payables:
- The Number of Days of Payables has varied from 51.70 days in 2022 to 61.57 days in 2023.
- This metric highlights how long Monster Beverage takes to pay its suppliers, indicating the company's ability to manage its trade credit effectively.
- A longer payment period may suggest favorable working capital management, but it could also create strain on supplier relationships if extended too far.

Overall, analyzing these activity ratios provides insights into Monster Beverage Corp.'s operational efficiency, inventory management, collection practices, and payment strategies. Monitoring these ratios over time can help identify trends and areas for improvement in the company's working capital cycle.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	7.95	12.14	17.66	14.58	14.05
Total asset turnover	0.73	0.76	0.71	0.74	0.81

Monster Beverage Corp.'s long-term activity ratios provide insights into how well the company utilizes its fixed assets and total assets to generate sales.

1. Fixed asset turnover: The trend in fixed asset turnover shows a decreasing pattern over the past five years, indicating that the company is generating fewer sales relative to its investment in fixed assets. The ratio was highest in 2021 at 17.66, suggesting the company was more efficient in utilizing its fixed assets to generate revenue. However, it decreased to 8.02 in 2023, signaling a decline in the efficiency of fixed asset utilization. This may raise concerns about the company's ability to generate revenue from its fixed assets.

2. Total asset turnover: The total asset turnover ratio demonstrates how efficiently the company generates sales in relation to its total assets. The trend in this ratio also shows a slight decrease over the period, indicating a decreasing efficiency in asset utilization. The ratio was lowest in 2021 at 0.71, suggesting that the company was less effective in utilizing its total assets to generate revenue. However, it slightly improved to 0.74 in 2023.

Overall, the decreasing trend in both fixed asset turnover and total asset turnover ratios suggests that Monster Beverage Corp. may not be effectively utilizing its assets to generate sales. Management should closely monitor these ratios and strategize ways to improve asset efficiency to enhance overall financial performance.