Organon & Co (OGN)

Short-term

Turnover ratios

Organon & Co's inventory turnover has shown a declining trend over the past five years, dropping from 3.67 in 2020 to 2.03 in 2024. This indicates that the company is holding inventory for a longer period before selling it, which may tie up capital and increase carrying costs.

The receivables turnover and payables turnover ratios are not available for analysis as they are represented as "—". Typically, a higher receivables turnover reflects a more efficient collection process, while a higher payables turnover indicates a more effective management of accounts payable.

The working capital turnover ratio fluctuated between 3.63 and 5.42 during the same period, showing some variability in how efficiently the company is generating revenue from its working capital. A higher working capital turnover ratio generally indicates effective utilization of working capital in generating sales.

Overall, Organon & Co may need to focus on improving its inventory management to enhance cash flow and profitability, while also monitoring and optimizing its receivables and payables turnover ratios to maintain efficient working capital utilization.

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Average number of days

Based on the provided data for Organon & Co, let's analyze the activity ratios:

1. Days of Inventory on Hand (DOH):
- The DOH represents the number of days it takes for a company to sell its entire inventory.
- Organon & Co exhibited a trend of increasing DOH over the years: from 99.57 days in 2020 to 179.38 days in 2024.
- A rising DOH could indicate potential issues with inventory management, such as overstocking or slowing sales.

2. Days of Sales Outstanding (DSO):
- DSO measures the average number of days a company takes to collect revenue after a sale is made.
- The data provided does not include DSO figures for Organon & Co across the years.
- Without DSO data, it is challenging to assess the efficiency of the company in collecting payments from customers.

3. Number of Days of Payables:
- This ratio indicates the average number of days it takes a company to pay its suppliers.
- Similar to DSO, the data does not provide information on the Number of Days of Payables for Organon & Co.
- Missing this figure impairs the ability to evaluate how efficiently the company manages its payables.

Overall, the increasing trend in DOH raises concerns about Organon & Co's inventory management efficiency. However, without DSO and payable days data, a complete assessment of the company's overall activity ratios is not feasible.

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Long-term

The data provided shows a declining trend in Organon & Co's long-term activity ratios over the years. The Fixed Asset Turnover ratio, which measures how efficiently the company is utilizing its fixed assets to generate sales, has decreased from 7.43 in 2020 to 5.01 in 2022. This indicates that the company is generating fewer sales in relation to its fixed assets, which could be a sign of inefficiency or underutilization of fixed assets.

Similarly, the Total Asset Turnover ratio, which measures how effectively the company is using its total assets to generate revenue, has also decreased from 0.78 in 2020 to 0.49 in 2024. This downward trend suggests that the company is generating less revenue relative to its total assets, which could indicate declining efficiency in utilizing its assets to generate sales.

Overall, the decreasing trend in both Fixed Asset Turnover and Total Asset Turnover ratios indicates potential inefficiencies in asset utilization and revenue generation at Organon & Co over the years. Further analysis and investigation into the reasons behind these declines would be necessary to identify and address any underlying issues impacting the company's long-term activity ratios.