Neogen Corporation (NEOG)

Short-term

Turnover ratios

Neogen Corporation's activity ratios reflect its efficiency in managing inventory, receivables, payables, and working capital.

1. Inventory Turnover: Neogen's inventory turnover has shown some fluctuations over the periods, ranging from 3.59 to 6.65. Higher turnover indicates efficient management of inventory levels, with the company selling and restocking its inventory multiple times during the year.

2. Receivables Turnover: The receivables turnover ratio shows the company's ability to collect cash from its credit sales. Neogen's receivables turnover has varied between 7.54 and 12.92. A higher turnover indicates that the company is collecting its receivables more quickly.

3. Payables Turnover: Neogen's payables turnover has fluctuated between 7.85 and 18.95. A higher turnover suggests that the company is paying its suppliers quickly, which can sometimes indicate strong bargaining power.

4. Working Capital Turnover: The working capital turnover ratio measures how efficiently the company is using its working capital to generate sales. Neogen's ratio has ranged from 1.29 to 4.26. A higher turnover signifies that the company is effectively using its working capital to support its operations and generate revenue.

In general, a high turnover ratio is favorable as it indicates efficiency and effective management of assets and liabilities. Neogen Corporation's activity ratios show a mix of performance levels across different periods, indicating fluctuations in operational efficiency.

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Average number of days

Neogen Corporation's activity ratios reflect its efficiency in managing inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH): Neogen's DOH has been fluctuating over the past two years but has generally been within the range of 50 to 100 days. The increase in DOH from August 2023 to August 2024 may indicate a build-up of inventory levels relative to sales, potentially tying up more resources.

2. Days of Sales Outstanding (DSO): Neogen's DSO has varied but has generally ranged from 25 to 50 days over the past two years. A lower DSO is generally preferred as it indicates faster collection of receivables. Neogen's DSO has shown some improvement in recent periods, indicating efficient management of receivables.

3. Number of Days of Payables: Neogen's days of payables have shown some volatility but have mostly been within 20 to 50 days range. A lower number of days of payables suggests that the company is paying its suppliers more quickly. The reduction in days of payables from May 2023 to November 2023 may indicate more timely payments to suppliers.

Overall, Neogen Corporation's activity ratios suggest some areas for improvement in managing inventory levels and payables to enhance efficiency and optimize working capital management.

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Long-term

Neogen Corporation's long-term activity ratios provide insight into the efficiency with which the company generates sales revenue relative to its fixed assets and total assets.

1. Fixed Asset Turnover: This ratio measures how effectively Neogen utilizes its fixed assets to generate sales. The trend in fixed asset turnover shows an increasing pattern over the past several periods, indicating that the company is efficient in generating sales revenue relative to its investment in fixed assets. Neogen's fixed asset turnover has ranged from 5.92 to 9.61, with a generally upward trend. An increasing fixed asset turnover ratio reflects improved operational efficiency and asset utilization.

2. Total Asset Turnover: This ratio assesses Neogen's ability to generate sales revenue relative to its total assets. The trend indicates fluctuation over time, with some periods showing a relatively stable total asset turnover and others demonstrating variability. Notably, there was a significant increase in the total asset turnover ratio in Nov 2022, implying a potential improvement in overall asset utilization efficiency. However, it is essential to note that the ratio dipped thereafter, suggesting a potential decrease in productivity relative to total assets.

In summary, the analysis of Neogen Corporation's long-term activity ratios indicates strong operational efficiency in utilizing fixed assets to generate sales revenue. Although the total asset turnover shows some fluctuation, the company has demonstrated periods of improved efficiency in utilizing total assets to generate sales. Overall, Neogen Corporation appears to be effectively managing its assets to drive revenue generation.