Neogen Corporation (NEOG)

Neogen Corp.'s days of sales outstanding (DSO) is a crucial financial ratio that measures the average number of days it takes for the company to collect revenue after making a sale. A lower DSO indicates faster collection of sales, which is generally favorable for a company's cash flow and liquidity.

Analyzing Neogen Corp.'s DSO over the last five years, we observe a decreasing trend from 72.78 days in 2019 to 68.01 days in 2023. This downward trend indicates an improvement in the company's efficiency in collecting revenue from its sales. A decreasing DSO implies that Neogen Corp. has been able to enhance its accounts receivable management and collect sales revenue more swiftly over the years.

A lower DSO could be attributed to effective credit management, prompt invoicing, and efficient collection processes. It also suggests that Neogen Corp. has been successful in maintaining strong relationships with its customers, thereby receiving payments for sales in a timelier manner.

From an investor's perspective, a decreasing DSO reflects positively on the company's financial health as it indicates efficient working capital management and the potential for improved cash flows. It also suggests that the company's credit and collection policies are effective in ensuring timely payments from its customers.

Overall, Neogen Corp.'s decreasing trend in DSO demonstrates improved efficiency in collecting sales revenue and is a positive indicator of the company's financial performance and management of its accounts receivable. It is essential to monitor this ratio in subsequent periods to ensure that the trend continues and to evaluate its impact on the company's overall financial position.

Peer comparison

May 31, 2023