Neogen Corporation (NEOG)

Short-term

Turnover ratios

Inventory Turnover Ratio:

Neogen Corporation's inventory turnover ratio has fluctuated over the years, ranging from 3.59 to 6.92. The average inventory turnover ratio over this period was approximately 4.63. A higher inventory turnover ratio indicates that the company is selling its inventory more efficiently.

Receivables Turnover Ratio:

The receivables turnover ratio for Neogen Corporation ranged from 7.54 to 12.92, with an average ratio of around 9.51. This ratio reflects how many times a company turns its accounts receivable into cash during a period. A higher ratio indicates that the company is collecting its receivables more quickly.

Payables Turnover Ratio:

Neogen Corporation's payables turnover ratio varied between 7.85 and 18.95, with an average ratio of about 13.93. This ratio measures how quickly a company pays its suppliers. A higher payables turnover ratio suggests that the company is managing its payables efficiently.

Working Capital Turnover Ratio:

The working capital turnover ratio for Neogen Corporation increased steadily over the years, ranging from 1.29 to 4.28 with an average of approximately 2.47. This ratio indicates how efficiently the company generates revenue from its working capital. A higher ratio suggests that the company is utilizing its working capital effectively to generate sales.

Overall, Neogen Corporation has shown varying trends in its activity ratios, with fluctuations in inventory turnover, receivables turnover, payables turnover, and working capital turnover. It is essential for the company to monitor these ratios continuously to ensure efficient operations and financial health.

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Average number of days

Neogen Corporation's activity ratios show varying levels of efficiency in managing its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH): Neogen Corporation's DOH has fluctuated over time, indicating changes in the company's inventory management efficiency. A lower DOH signifies faster turnover and better management of inventory levels. From November 2023 to November 2024, there was a significant improvement in inventory management, with DOH decreasing from 79.80 days to 52.77 days, suggesting more effective control over inventory levels.

2. Days of Sales Outstanding (DSO): The DSO ratio reflects how quickly Neogen Corporation collects on its receivables. The trend shows some fluctuations, but generally, the company has been able to collect receivables efficiently. For example, from August 2023 to November 2024, DSO decreased from 28.26 days to 33.41 days, indicating a slight increase in the collection period. Overall, a lower DSO is preferable as it implies faster collection of receivables.

3. Number of Days of Payables: The number of days of payables reflects how long Neogen Corporation takes to pay its suppliers. A longer payable period indicates that the company is taking longer to settle its payables, which can be beneficial in terms of managing cash flow. The trend in Neogen's payable days shows fluctuations, with some periods of longer payment durations. For instance, from May 2023 to November 2024, the number of days of payables decreased from 33.70 days to 21.18 days, suggesting improved efficiency in paying suppliers.

In summary, Neogen Corporation has shown improvements in inventory turnover and managing payables efficiently, although there have been fluctuations in receivables collection. Efficient management of these activity ratios is essential for maintaining healthy cash flow and sustaining overall financial health.

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Long-term

Neogen Corporation's fixed asset turnover ratio has experienced fluctuations over the years, starting at a high of 9.38 in November 2019 and gradually decreasing to a low of 5.77 in November 2024. The ratio measures how efficiently the company generates sales from its fixed assets, such as property, plant, and equipment.

On the other hand, the total asset turnover ratio, which reflects the company's ability to generate revenue from its total assets, has shown a more erratic trend. It dropped significantly from 0.96 in November 2019 to 0.27 in November 2022 before recovering to 0.44 in November 2024.

These ratios suggest that Neogen Corporation may have faced challenges in utilizing its assets efficiently, particularly during the period marked by lower ratios. However, the recent uptick in both fixed asset turnover and total asset turnover ratios indicates an improved efficiency in utilizing assets to drive sales, which could be a positive sign for the company's financial performance.