OSI Systems Inc (OSIS)

Short-term

Turnover ratios

The activity ratios of OSI Systems Inc over the observed period reveal insights into the company's operational efficiency and working capital management.

Inventory Turnover: The ratio shows a general declining trend from 2.79 at the end of September 2020 to a low of approximately 2.02 in September 2023. Although there are periods of recovery, notably reaching 2.55 in June 2024 before stabilizing around 2.55 and slightly higher in late 2024 and mid-2025, the overall pattern indicates a gradual decrease in inventory turnover efficiency over the span. This suggests that inventory is generally held longer before being sold, potentially impacting liquidity or reflecting a strategic buildup of inventory.

Receivables Turnover: The receivables turnover exhibits variability but maintains an overall downward trajectory from 4.46 in September 2020 to around 2.33 in September 2024. Periodic recoveries, such as reaching 4.00 in March 2023, juxtapose with declines to approximately 2.04 in June 2025. These fluctuations imply increasing days sales outstanding (DSO), indicating that the company has been taking longer to collect receivables, which could pose liquidity risks.

Payables Turnover: This ratio fluctuates over time with a downward trend from about 7.70 in September 2020 to an average around 5 in most subsequent periods, albeit with some fluctuations. Notably, in June 2025, the ratio drops sharply to 4.00, suggesting the company is paying its suppliers more slowly, which might be a strategy to optimize cash flows or a sign of deteriorating liquidity conditions.

Working Capital Turnover: The ratio demonstrates notable variability and an overall declining trend. Starting from 4.02 at the end of September 2020, it dramatically spikes in September 2021 to nearly 16, then declines sharply afterward, reaching as low as around 2.36 by June 2025. This pattern indicates fluctuating efficiency in using working capital to generate sales, with recent periods showing reduced efficiency. The significant spike in late 2021 could reflect temporary operational efficiency or a period of unusually high sales relative to working capital.

In summary, OSI Systems Inc's activity ratios reveal a trend toward decreasing inventory and receivables turnover, alongside fluctuating payables and declining working capital efficiency. These patterns suggest the company has been holding inventory longer, taking more time to collect receivables, and relying more on extended payables, which could imply a strategic shift in working capital management or emerging liquidity challenges.

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Average number of days

The analysis of OSI Systems Inc.'s activity ratios over the indicated periods reveals notable trends in inventory management, receivables collection, and payment practices.

Days of Inventory on Hand (DOH):
The DOH metric exhibits a consistent upward trend from approximately 130.78 days at the end of September 2020 to a peak of 184.84 days by December 2023. This indicates a lengthening of inventory holding periods, suggesting potential challenges in inventory turnover or a strategic accumulation of stock, possibly due to production schedules, supply chain considerations, or cautious inventory buildup. A notable decline occurs in June 2024 to 143.18 days, implying improved inventory efficiency, followed by a slight resurgence to 157.55 days by September 2024 and fluctuations thereafter. The distribution of DOH days may reflect cyclical or sector-specific inventory strategies.

Days of Sales Outstanding (DSO):
The DSO fluctuates within the range of approximately 81.76 days (September 2020) to a high of 178.49 days (June 2025). Early in the period, DSO remains relatively stable, averaging around 86–97 days, although a significant increase is observed starting in March 2024, reaching over 125 days and continuing upward toward nearly 178 days by mid-2025. This trend indicates a lengthening of receivable collection periods, potentially reflecting more lenient credit policies, challenges in collection, or shifts in customer payment behaviors.

Number of Days of Payables:
The payable days fluctuate between approximately 47.41 days (September 2020) and 91.19 days (June 2025). Initial periods show smaller payable durations, which then increase notably around March 2021 to 65.08 days and further peak at 70.92 days in June 2021. Subsequently, the payable period remains mostly within a 58–70 day range, with intermittently higher figures such as 91.19 days in June 2025. The expansion of payable days over time could indicate extended credit terms negotiated with suppliers or deliberate delays in payment to improve liquidity or cash flow management.

In summary, OSI Systems Inc. exhibits a trend of increasing inventory holding times and receivable collection periods, particularly from late 2023 onward, which may reflect operational adjustments, strategic shifts, or sector-specific challenges. Payment cycles show a tendency toward extended durations, aligning with the overall activity pattern and possibly impacting liquidity and working capital management strategies.

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Long-term

The analysis of OSI Systems Inc.'s long-term activity ratios, based on the provided data, indicates several notable trends and points for consideration.

Fixed Asset Turnover:
This ratio measures how efficiently the company utilizes its fixed assets to generate sales. Between September 30, 2020, and June 30, 2023, the fixed asset turnover demonstrates an overall upward trajectory, increasing from 8.85 to 11.74. This trend suggests an improvement in the utilization efficiency of fixed assets over this period, with the ratio peaking at 11.74 in June 2023. The sharp increase during this period indicates a possible enhancement in asset management practices or sales growth relative to the investment in fixed assets.

However, data for subsequent quarters is unavailable beyond June 2023, limiting the ability to assess performance post this period. The absence of ratios beyond this date, especially the decline from 10.03 to 8.05 observed in the preceding quarters, could potentially imply some operational challenges or asset underutilization during later periods, but this cannot be confirmed without additional details.

Total Asset Turnover:
This ratio gauges how effectively the total assets are used to generate sales. Over the period from September 2020 to June 2023, the total asset turnover exhibits relative stability, fluctuating modestly between a low of 0.76 (September 2024) and a high of 0.83 (various quarters within 2021 and 2023). The slight downward trend observed from late 2022 onward may reflect a decrease in the efficiency of total assets in generating sales, perhaps due to increased asset base not proportionally matched by sales growth.

The ratios indicate that OSI Systems maintains a conservative but stable level of asset utilization within its operations. The decrease toward the latter part of the observed timeline could be an area for further investigation, especially to determine if it relates to changes in operational strategy or asset composition.

Summary:
The fixed asset turnover ratio’s upward trend until mid-2023 signals improved asset productivity, while the overall stability of the total asset turnover ratio suggests consistent asset efficiency at the broader level. Nevertheless, the limited data for the latter part of 2023 and beyond constrains comprehensive analysis of recent performance. The company’s long-term activity ratios reflect a history of efficiency improvements and steady operational asset utilization, with potential areas of concern related to the recent observed declines in total asset turnover.