Philip Morris International Inc (PM)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Inventory turnover	1.64	1.41	1.25	1.40	1.19
Receivables turnover	8.04	7.70	21.18	26.08	26.00
Payables turnover	3.93	3.67	3.04	3.65	4.11
Working capital turnover	—	—	—	—	57.15

1. Inventory Turnover Ratio:
- The inventory turnover ratio measures how efficiently a company manages its inventory.
- Philip Morris International Inc's inventory turnover improved from 1.19 in 2020 to 1.64 in 2024.
- The increasing trend indicates that the company is selling its inventory more quickly over the years, implying effective inventory management.

2. Receivables Turnover Ratio:
- The receivables turnover ratio reflects how efficiently a company collects payments from its customers.
- Philip Morris International Inc's receivables turnover decreased from 26.08 in 2021 to 8.04 in 2024.
- The declining trend suggests that the company is taking more time to collect payments from customers in recent years, which could indicate potential issues with credit policies or customer payment delays.

3. Payables Turnover Ratio:
- The payables turnover ratio shows how well a company manages its payments to suppliers.
- Philip Morris International Inc's payables turnover varied slightly but remained relatively stable between 3.04 and 4.11 over the years.
- The consistent payables turnover ratio indicates the company is maintaining a steady balance between settling its payables and cash flow management.

4. Working Capital Turnover Ratio:
- Unfortunately, data for working capital turnover is missing for the years provided.
- The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales.
- Without the data, it is difficult to assess how effectively Philip Morris International Inc utilized its working capital during these years.

In summary, Philip Morris International Inc has shown improvement in inventory turnover, a decline in receivables turnover, and stable payables turnover. However, further analysis may be needed to understand the working capital turnover aspect of the company's operational efficiency.

Average number of days

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	221.96	258.60	291.05	261.61	306.19
Days of sales outstanding (DSO)	days	45.41	47.41	17.23	13.99	14.04
Number of days of payables	days	92.79	99.44	120.00	99.94	88.75

Based on the data provided for Philip Morris International Inc, let's analyze the activity ratios:

1. Days of Inventory on Hand (DOH):
- The trend for DOH shows a general decrease from 2020 to 2024, indicating that the company has been able to manage its inventory more efficiently over the years.
- The company held inventory for an average of 306.19 days in 2020, which reduced to 221.96 days by the end of 2024.
- Lower DOH implies faster inventory turnover, which can lead to cost savings and improved liquidity.

2. Days of Sales Outstanding (DSO):
- The DSO trend shows fluctuations over the years, with an overall increase from 2020 to 2024.
- The company collected sales within an average of 14.04 days in 2020, which increased to 45.41 days by the end of 2024.
- Higher DSO indicates that it takes more time for the company to collect receivables, which may impact cash flow and working capital management negatively.

3. Number of Days of Payables:
- The trend for the number of days of payables also shows fluctuations but remains relatively stable over the years.
- The company paid its payables within an average of 88.75 days in 2020, which increased slightly to 92.79 days by the end of 2024.
- Longer payables period suggests that the company is taking more time to pay its suppliers, which could indicate a favorable short-term liquidity position.

In conclusion, while Philip Morris International Inc has been able to improve its inventory management efficiency by reducing DOH, there are concerns regarding the increase in DSO, which could impact cash flow. Additionally, the relatively stable payables period indicates a consistent payment relationship with suppliers. Overall, further analysis and monitoring of these activity ratios are recommended to assess the company's operational efficiency and working capital management.

Long-term

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Fixed asset turnover	5.23	4.57	17.50	19.19	16.85
Total asset turnover	0.61	0.52	1.87	2.82	2.39

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. A higher ratio indicates better utilization of fixed assets. In the case of Philip Morris International Inc, the fixed asset turnover has generally improved over the years from 16.85 in 2020 to 19.19 in 2021, but then decreased to 17.50 in 2022, and significantly dropped to 4.57 in 2023 before slightly recovering to 5.23 in 2024. The drastic decline in 2023 suggests potential issues with the company's ability to generate sales relative to its investment in fixed assets.

Total asset turnover, on the other hand, reflects the efficiency with which a company is using all its assets to generate sales. A higher total asset turnover ratio signifies better asset utilization. Philip Morris International Inc's total asset turnover ratio followed a similar pattern, increasing from 2.39 in 2020 to 2.82 in 2021, then dropping to 1.87 in 2022, and significantly plummeting to 0.52 in 2023, before recovering slightly to 0.61 in 2024.

The declining trend in both fixed asset turnover and total asset turnover ratios in 2023 indicates potential inefficiencies in asset utilization during that period. It will be essential for the company to investigate the reasons behind these drops and take necessary steps to improve operational efficiency and enhance the utilization of assets in future periods.