Nu Skin Enterprises Inc (NUS)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company is managing its assets and liabilities to generate sales or revenue. Let's analyze the activity ratios of Nu Skin Enterprises, Inc. based on the data provided.

1. Inventory Turnover:
Nu Skin's inventory turnover has fluctuated over the past five years, ranging from 1.69 to 2.19. A higher inventory turnover ratio indicates that the company is selling its inventory more frequently, which is generally considered positive. However, the variability in the ratio may suggest some inconsistency in managing inventory levels efficiently.

2. Receivables Turnover:
The receivables turnover ratio for Nu Skin has shown a decreasing trend over the years, from 65.27 in 2021 to 27.02 in 2023. A lower receivables turnover ratio may suggest that the company is taking longer to collect payments from its customers, which could potentially impact cash flow and liquidity.

3. Payables Turnover:
The payables turnover ratio for Nu Skin has generally been stable, with some fluctuations over the years. A higher payables turnover ratio indicates that the company is paying its suppliers more quickly, which could indicate strong creditor relations and effective working capital management.

4. Working Capital Turnover:
Nu Skin's working capital turnover has followed a relatively consistent pattern over the years, ranging from 5.28 to 7.85. A higher working capital turnover ratio indicates that the company is efficiently utilizing its working capital to generate sales. Nu Skin's consistent performance in this ratio suggests effective management of its current assets and liabilities.

Overall, while Nu Skin Enterprises, Inc. demonstrates varying levels of efficiency in managing its inventory, receivables, and payables, its working capital turnover ratio reflects a relatively stable and efficient use of working capital to support its sales and operational activities.

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Average number of days

Days of inventory on hand (DOH) measures how many days, on average, inventory is held before being sold. A decreasing trend in DOH is generally preferred as it indicates more efficient management of inventory. Nu Skin Enterprises, Inc. saw a slight improvement in this ratio from 2022 to 2023.

Days of sales outstanding (DSO) represents the average number of days it takes for the company to collect on its sales. A lower DSO is preferred as it indicates quicker collection of receivables. Nu Skin Enterprises, Inc. experienced fluctuations in DSO over the years, with a notable increase in 2023 compared to the previous year.

Number of days of payables reflects the average number of days the company takes to pay its suppliers. A higher number of days implies that the company is taking longer to settle its payables. Nu Skin Enterprises, Inc. saw a decreasing trend in this ratio from 2022 to 2023, indicating a potential improvement in payment efficiency to suppliers.

Overall, Nu Skin Enterprises, Inc. should continue to monitor and manage its activity ratios to ensure efficient management of inventory, timely collection of receivables, and optimal payment to suppliers.

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Long-term

The long-term activity ratios of Nu Skin Enterprises, Inc. indicate how efficiently the company is utilizing its assets to generate revenue over the years.

The fixed asset turnover ratio has declined from 5.34 in 2019 to 4.55 in 2023. This suggests that the company is generating $4.55 in sales for every dollar invested in fixed assets. Although the ratio has decreased over the years, it still indicates that Nu Skin is effectively utilizing its fixed assets to generate revenue.

In contrast, the total asset turnover ratio has also decreased from 1.37 in 2019 to 1.09 in 2023. This ratio signifies that Nu Skin is generating $1.09 in sales for every dollar invested in total assets. The declining trend in total asset turnover may indicate that the company's total asset base is growing at a faster rate than its revenue generation.

Overall, Nu Skin Enterprises, Inc. seems to be maintaining a reasonable level of efficiency in utilizing its fixed assets to generate revenue, although there is a slight decrease in both fixed asset turnover and total asset turnover ratios over the years. Management should monitor these ratios closely to ensure optimal utilization of assets in driving revenue growth.