Perrigo Company PLC (PRGO)

Short-term

Turnover ratios

Perrigo Company plc's activity ratios provide insights into how effectively the company is managing its assets and liabilities to generate revenues.

1. Inventory turnover: Perrigo's inventory turnover has been relatively stable over the past five years, with a slight decline from 3.17 in 2019 to 2.61 in 2023. This indicates that the company is able to sell and replace its inventory approximately 2.61 times a year. A lower turnover could suggest either overstocking or slow-moving inventory.

2. Receivables turnover: The receivables turnover ratio has shown a consistent improvement, increasing from 3.89 in 2019 to 6.29 in 2023. This indicates that Perrigo is collecting its accounts receivable more efficiently, with sales being converted to cash more rapidly. It also suggests effective credit and collection management practices.

3. Payables turnover: Perrigo's payables turnover has fluctuated over the years but has generally been within a narrow range. The ratio increased from 5.89 in 2019 to 6.23 in 2023, indicating that the company is taking longer to pay its suppliers. This could be a strategic move to improve cash flow or negotiate more favorable credit terms.

4. Working capital turnover: Perrigo's working capital turnover has shown fluctuations over the past five years, with a significant increase in 2023 to 3.73 from 1.82 in 2021. A higher working capital turnover implies that the company is generating revenues using its working capital more efficiently. It indicates that Perrigo is able to generate sales relative to the amount of working capital invested in the business.

In summary, Perrigo Company plc's activity ratios reflect varying levels of efficiency in managing its assets and liabilities. The improvements in receivables turnover and working capital turnover suggest better management of receivables and working capital, which could positively impact the company's overall financial performance. It is important for Perrigo to continue monitoring these ratios to ensure optimal utilization of its resources.

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Average number of days

Activity ratios provide insights into how efficiently a company manages its assets and liabilities. Let's analyze Perrigo Company plc's activity ratios over the past five years:

Days of Inventory on Hand (DOH):
- The trend shows a slight increase in the number of days of inventory on hand from 115.23 days in 2019 to 139.97 days in 2023.
- This indicates that Perrigo is holding inventory for a longer period, which may tie up capital and increase carrying costs.

Days of Sales Outstanding (DSO):
- There has been a decreasing trend in the days of sales outstanding from 93.80 days in 2019 to 57.98 days in 2023.
- This suggests that Perrigo has been collecting its accounts receivable more efficiently, possibly due to improved credit policies or better collections processes.

Number of Days of Payables:
- The number of days of payables has fluctuated over the years, with a decrease from 61.97 days in 2019 to 58.60 days in 2023.
- This indicates that Perrigo is taking longer to pay its suppliers, which may have implications for supplier relationships and cash flow management.

Overall, while Perrigo has shown improvement in managing its receivables, there is a need for closer monitoring of inventory levels as the DOH has been increasing. Additionally, the management of payables should be carefully balanced to ensure efficient cash flow management and maintain good relationships with suppliers.

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Long-term

The fixed asset turnover ratio for Perrigo Company plc has shown a consistent pattern over the past five years, ranging from 4.79 to 5.36, indicating that the company generated between $4.79 and $5.36 in sales for every dollar invested in fixed assets during those years. This suggests that the company efficiently utilizes its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio has also demonstrated stability, varying between 0.40 and 0.44 over the same period. This ratio signifies that Perrigo generates between $0.40 and $0.44 in sales for each dollar of total assets owned, indicating the company's ability to efficiently generate revenue from its total asset base.

Overall, Perrigo Company plc shows a consistent trend of effectively utilizing both its fixed and total assets to generate sales, highlighting its operational efficiency and ability to maximize asset utilization for revenue generation.