Neogen Corporation (NEOG)

Payables turnover

		May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019
Cost of revenue	US$ in thousands	836,479	463,396	387,925	344,910	342,391
Payables	US$ in thousands	76,669	34,614	23,900	25,650	19,063
Payables turnover		10.91	13.39	16.23	13.45	17.96

May 31, 2023 calculation

Payables turnover = Cost of revenue ÷ Payables
= $836,479K ÷ $76,669K
= 10.91

The payables turnover ratio for Neogen Corp. has shown a decreasing trend over the past five years. The ratio has decreased from 11.66 in 2019 to 5.43 in 2023.

The payables turnover ratio measures how efficiently a company is managing its payments to suppliers. A higher ratio indicates that the company is paying its suppliers more frequently within a given period, which can be a sign of good financial health.

A decreasing payables turnover ratio could potentially indicate that Neogen Corp. is taking longer to pay its suppliers, which may result in strained supplier relationships or potential cash flow issues. Alternatively, it could signify that the company is taking advantage of extended credit terms from suppliers, which can be beneficial for cash flow management.

It's important to consider other factors such as industry norms and the company's specific circumstances when interpreting the payables turnover ratio. A thorough analysis of the company's financial statements and management discussion and analysis (MD&A) can provide additional insights into the reasons behind the changes in the payables turnover ratio.