Premier Inc (PINC)

Short-term

Turnover ratios

The activity ratios for Premier Inc reflect several trends over the five-year period analyzed.

Inventory Turnover: The ratio exhibits a slight overall increase from 5.01 times in June 2021 to 5.72 times in June 2023, indicating an improvement in inventory management efficiency over this period. The ratio remains relatively stable at around 5.74 times in June 2024. The absence of data for June 2025 prevents further trend analysis, but within the available data, inventory turnover demonstrates a steady capacity to convert inventory into sales efficiently.

Receivables Turnover: This ratio shows a declining trend, decreasing from 4.21 times in June 2021 to 3.22 times in June 2023, and further to 2.91 times in June 2024, with a continued decline to 2.43 times in June 2025. The decreasing receivables turnover suggests that the company is taking longer to collect its accounts receivable, which could indicate loosening credit policies, increasing credit sales, or potential collection challenges.

Payables Turnover: The data indicates variability in Premier Inc's payables management. It increased from 10.35 times in June 2021 to 12.28 times in June 2022, implying more prompt payments to suppliers during that period. A subsequent decline to 8.09 times in June 2023 and 7.59 times in June 2024 suggests a slowdown in payment frequency, which may be indicative of extended payment terms or cash flow adjustments. However, an increase to 13.73 times in June 2025 reverses this trend, indicating a significant acceleration in paying suppliers again.

Working Capital Turnover: The ratio experienced a substantial increase from 26.27 times in June 2021 to 926.61 times in June 2024, reflecting a dramatic enhancement in the utilization efficiency of working capital. The absence of data for other periods limits comprehensive trend analysis, but the spike suggests a notable improvement in managing short-term assets and liabilities to generate sales.

In summary, Premier Inc's activity ratios reveal a trend of improving inventory efficiency, a decreasing speed in receivables collection, variable payables management, and a significant enhancement in working capital turnover. These shifts collectively suggest operational adjustments aimed at optimizing asset utilization, albeit with potential implications for liquidity and credit policies.

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Average number of days

The analysis of Premier Inc's activity ratios over the indicated period reveals notable trends and shifts in operational efficiency.

Days of Inventory on Hand (DOH):
Between June 30, 2021, and June 30, 2023, the company's inventory holding period experienced fluctuations. Starting at approximately 72.84 days in 2021, there was an increase to roughly 79.72 days in 2022, indicating a longer duration for inventory to be held before sale. Subsequently, a significant reduction occurred, bringing the DOH down to approximately 63.85 days in 2023, and marginally decreasing further to 63.55 days in 2024. This trend suggests an improvement in inventory management and more efficient inventory turnover in the latter years.

Days of Sales Outstanding (DSO):
Over the same period, the DSO showed a consistent upward trend. Beginning at approximately 86.68 days in 2021, it increased to 95.32 days in 2022, then to 113.24 days in 2023, and further to 125.39 days in 2024. The projected figure for 2025 indicates a continued rise to about 150.46 days. The lengthening of the receivables collection period signifies a slowdown in the company's collection efforts or potential changes in customer payment terms, which could impact cash flow and liquidity.

Number of Days of Payables:
The payables period experienced variability. It decreased from 35.27 days in 2021 to 29.73 days in 2022, indicating faster payment to suppliers or reduced credit terms. Conversely, it increased to 45.13 days in 2023 and slightly to 48.07 days in 2024, suggesting an extension in the period of honoring payables, possibly as a strategy to improve working capital. However, the forecasted decrease to approximately 26.59 days in 2025 indicates a potential tightening of payment practices or reduced credit extensions from suppliers.

Overall Assessment:
The activity ratios reflect strategic shifts in operational management. The reduction in Days of Inventory on Hand indicates improved inventory turnover and efficiency. Conversely, the increasing Days of Sales Outstanding signals potential concerns regarding receivables management and cash flow liquidity. The fluctuating Days of Payables suggest changes in credit policies or supplier relationships, with an apparent tendency toward longer payable periods followed by a potential contraction. These ratios collectively illustrate an evolving operational environment that may require targeted management attention to maintain optimal liquidity and working capital performance.

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Long-term

The analysis of Premier Inc.'s long-term activity ratios reveals the following insights based on the provided data:

Fixed Asset Turnover Ratio:
This ratio measures the efficiency with which the company utilizes its fixed assets to generate sales. From June 30, 2021, through June 30, 2023, the ratio exhibited some fluctuation, decreasing from 6.32 in 2021 to 5.67 in 2022, and then slightly recovering to 6.29 in 2023. The decline between 2021 and 2022 suggests a temporary reduction in fixed asset efficiency or increased investment in fixed assets not immediately translated into proportional sales. The subsequent increase indicates a partial recovery in asset utilization. No data is available beyond June 30, 2023, for subsequent years.

Total Asset Turnover Ratio:
This ratio indicates the overall efficiency of asset utilization to generate sales. The ratio decreased from 0.49 in 2021 to 0.43 in 2022, and further declined to 0.40 in 2023. The consistent downward trend signifies a gradual decline in overall asset utilization efficiency over this period. As with the fixed asset ratio, no data exists for periods beyond June 30, 2023, to analyze future trends.

Overall, there has been a slight decline in both ratios over the analyzed period, with the fixed asset turnover showing some recovery in 2023 after a dip in 2022, while the total asset turnover ratios have steadily decreased. This could suggest challenges in maintaining asset utilization efficiency or effects of increased investments in assets that have yet to be fully converted into sales, highlighting areas for potential operational improvement.