Royal Gold Inc (RGLD)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 10.70 | 13.31 | 10.55 | 6.86 | 9.89 |
| Receivables turnover | 631.60 | 226.35 | 196.74 | 143.50 | 204.85 |
| Payables turnover | 13.12 | 11.39 | 19.97 | 18.96 | 46.47 |
| Working capital turnover | 3.78 | 6.38 | 4.93 | 2.65 | 1.57 |
Activity ratios provide insights into how efficiently a company is managing its assets and operations. Let's analyze Royal Gold Inc's activity ratios based on the provided data:
1. Inventory turnover:
- The inventory turnover ratio decreased from 9.89 in June 30, 2020, to 6.86 in June 30, 2021, indicating a decrease in the frequency of inventory being sold and replenished.
- However, the ratio improved to 10.55 by December 31, 2022, peaked at 13.31 by December 31, 2023, and then slightly decreased to 10.70 by December 31, 2024, which suggests a more efficient management of inventory in recent years.
2. Receivables turnover:
- Royal Gold Inc's receivables turnover ratio fluctuated over the years, decreasing from 204.85 in June 30, 2020, to 143.50 in June 30, 2021, before increasing significantly to 631.60 by December 31, 2024.
- The increasing trend in receivables turnover indicates that the company's ability to collect receivables has improved significantly, particularly in the most recent year.
3. Payables turnover:
- The payables turnover ratio for Royal Gold Inc decreased from 46.47 in June 30, 2020, to 18.96 in June 30, 2021, and continued to decline to 11.39 by December 31, 2023, before slightly improving to 13.12 by December 31, 2024.
- The decreasing trend in payables turnover suggests that the company is taking longer to pay its suppliers, which may have implications for cash flow management and vendor relationships.
4. Working capital turnover:
- The working capital turnover ratio for Royal Gold Inc improved from 1.57 in June 30, 2020, to 2.65 in June 30, 2021, and continued to increase to 6.38 by December 31, 2023, before declining to 3.78 by December 31, 2024.
- The increase in the working capital turnover ratio indicates that the company is generating higher revenue relative to its working capital, which can be seen as a positive sign of operational efficiency in utilizing its current assets.
In conclusion, Royal Gold Inc's activity ratios show fluctuations and trends that reflect changes in the efficiency of managing inventory, receivables, payables, and working capital over the years. Additional analysis and context would be needed to fully interpret the implications of these ratios for the company's operations and financial performance.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 34.12 | 27.42 | 34.59 | 53.22 | 36.91 |
| Days of sales outstanding (DSO) | days | 0.58 | 1.61 | 1.86 | 2.54 | 1.78 |
| Number of days of payables | days | 27.82 | 32.05 | 18.27 | 19.25 | 7.85 |
Based on the provided data for Royal Gold Inc's activity ratios:
1. Days of Inventory on Hand (DOH):
- The company's inventory turnover has varied over the years. In June 2020, Royal Gold held inventory for approximately 36.91 days before selling it, which increased to 53.22 days by June 2021. However, the trend reversed, with the DOH decreasing to 27.42 days by December 2023, but then increasing slightly to 34.12 days by December 2024. Overall, there has been fluctuation in the efficiency of inventory management over the years.
2. Days of Sales Outstanding (DSO):
- Royal Gold's DSO has been consistently low, indicating a quick turnover of accounts receivable into cash. In June 2020, the company took only 1.78 days to convert sales into cash, which increased slightly to 2.54 days by June 2021. However, the DSO decreased significantly to 0.58 days by December 2024, reflecting efficient collection of receivables.
3. Number of Days of Payables:
- The number of days Royal Gold takes to pay its payables has shown an increasing trend. In June 2020, the company took 7.85 days to settle its payables, which more than doubled to 19.25 days by June 2021. The trend continued with a further increase to 27.82 days by December 2024. This indicates a relatively longer payment cycle, potentially giving the company more time to manage its cash flows.
In summary, while Royal Gold Inc has had fluctuations in its inventory turnover, it has demonstrated efficient management of accounts receivable with consistently low DSO. However, the increasing trend in the number of days of payables suggests a longer payment cycle, which could impact the company's cash flow management.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | — | — | — |
| Total asset turnover | 0.21 | 0.18 | 0.17 | 0.24 | 0.18 |
The fixed asset turnover ratio for Royal Gold Inc was not available (NA) for the periods provided. This ratio indicates how efficiently the company generates revenue from its fixed assets.
On the other hand, the total asset turnover ratio, which measures how efficiently a company uses its total assets to generate sales, shows a fluctuating trend over the years. It stood at 0.18 on June 30, 2020, increased to 0.24 on June 30, 2021, dropped to 0.17 on December 31, 2022, slightly rose to 0.18 on December 31, 2023, and further improved to 0.21 on December 31, 2024.
Despite the fluctuations, the total asset turnover ratio generally increased from 2020 to 2024, indicating that Royal Gold Inc has gradually become more efficient in utilizing its total assets to generate sales over the years. This improvement suggests better efficiency and productivity in the company's operations during the period under review.