OSI Systems Inc (OSIS)

Short-term

Turnover ratios

The activity ratios of OSI Systems Inc. over the period from June 2021 to June 2025 exhibit notable trends.

Inventory Turnover: The ratio shows a slight overall increase, starting at 2.47 in 2021, declining modestly to 2.27 in 2022, then rising to 2.51 in 2023, and reaching 2.77 in 2025. This pattern indicates a gradual improvement in inventory management efficiency, with the company turning over its inventory more times per period overall.

Receivables Turnover: The receivables turnover ratio demonstrates a declining trend, decreasing from 3.95 in 2021 to 3.84 in 2022, followed by a sharper decline to 3.36 in 2023, and further decreasing to 2.37 in 2024, with a continued decline to 2.04 in 2025. This downward trajectory suggests a lengthening of the average collection period, which could reflect changes in credit policies or customer payment behaviors.

Payables Turnover: The ratio maintains an overall increasing trend, rising from 5.15 in 2021 to 6.06 in 2022, slightly increasing again to 6.10 in 2023, then declining to 5.27 in 2024, and further decreasing to 4.00 in 2025. The initial increase indicates a faster turnover of payables, but the subsequent decline in later years may imply extended payment periods or changes in supplier credit terms.

Working Capital Turnover: The ratio experiences significant fluctuations, beginning at 3.15 in 2021, surging to 8.95 in 2022, then decreasing to 4.77 in 2023, followed by a decline to 3.84 in 2024, and further down to 2.36 in 2025. The sharp spike in 2022 suggests a period of efficient utilization of working capital, whereas the subsequent decrease indicates a reduction in the efficiency of working capital management or increased investment in assets without a commensurate increase in sales.

In summary, OSI Systems Inc. displays improving inventory turnover but declining receivables turnover, indicating longer collection periods despite better inventory management. The payables turnover shows initial acceleration followed by a slowdown, potentially reflecting shifting payment strategies. The working capital turnover exhibits volatility, with periods of high efficiency followed by declines, suggesting variability in asset utilization relative to sales over the observed timeframe.

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Average number of days

The activity ratios of OSI Systems Inc., as of the provided periods, reveal insightful trends regarding inventory management, receivables collection, and payables practices.

Days of Inventory on Hand (DOH):
The DOH fluctuated over the analyzed period. It increased from approximately 147.71 days in June 2021 to a peak of 160.61 days in June 2022, indicating a lengthening in the time inventory remains on hand. Subsequently, a notable decrease occurred, bringing DOH down to approximately 145.50 days in June 2023, and further to 144.05 days in June 2024. As of June 2025, DOH has decreased further to around 131.99 days. The overall trend suggests a gradual improvement in inventory turnover, reducing storage and holding costs.

Days of Sales Outstanding (DSO):
The DSO exhibits a rising trend over the period, indicating that the company has been taking longer to collect receivables. It increased from about 92.50 days in June 2021 to 95.00 days in June 2022, then sharply rose to 108.73 days in June 2023. The escalation continued significantly in subsequent years, reaching 153.74 days in June 2024, and further extending to 178.49 days in June 2025. This trend suggests that receivables are being collected more slowly, potentially affecting cash flow management and liquidity.

Number of Days of Payables:
The days payable ratio reflects the average period OSI Systems Inc. delays payments to suppliers. It decreased from approximately 70.92 days in June 2021 to 60.23 days in June 2022, and remained relatively stable around 59.84 days in June 2023. In the subsequent years, the company extended its payment period, reaching approximately 69.20 days in June 2024 and further increasing to 91.19 days in June 2025. The upward trend in payables days indicates a lengthening of payment cycles, possibly as a strategic approach to manage liquidity or supplier terms.

Summary:
Overall, OSI Systems Inc. has demonstrated improvement in inventory turnover, as evidenced by a decreasing DOH. Conversely, receivable collection efficiency has declined substantially, with increasing DSO values signaling slower cash inflows. The company has also extended its payables period, which may serve to preserve liquidity but could impact supplier relationships or creditworthiness if extended excessively. These activity ratios collectively portray a company adjusting its operational cycles, possibly balancing cash flow considerations against operational efficiency.

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Long-term

The analysis of OSI Systems Inc.'s long-term activity ratios reveals notable trends over the periods from June 30, 2021, to June 30, 2023. The Fixed Asset Turnover ratio demonstrates a steady increase, rising from 9.72 in 2021 to 10.79 in 2022 and further to 11.74 in 2023. This upward movement indicates an improving efficiency in utilizing fixed assets to generate sales, suggesting that the company is increasingly effective in leveraging its property, plant, and equipment to support revenue growth.

Concurrently, the Total Asset Turnover ratio shows a slight downward trend, decreasing from 0.83 in 2021 and 2022 to 0.82 in 2023. This stability followed by minor decline suggests that while the company's overall asset base is relatively stable during this period, there is a marginal reduction in overall asset efficiency in generating sales. The ratio continues to decline in the subsequent projected years, reaching 0.79 in 2024 and 0.76 in 2025, implying a gradual decrease in how effectively total assets are being employed to produce revenue.

Collectively, these ratios depict a scenario where the company is becoming more proficient in deploying its fixed assets specifically but faces a slight decline in the overall utilization of its total assets. The divergence between the rising fixed asset turnover and the declining total asset turnover may indicate a strategic focus on optimizing fixed assets while other assets are less effectively utilized or that new asset acquisitions are not yet fully contributing to revenue generation. Overall, the trend reflects a shift toward more efficient fixed asset management amidst a modest contraction in overall asset efficiency.