Royal Gold Inc (RGLD)

Short-term

Turnover ratios

Activity ratios provide insights into how effectively Royal Gold Inc is managing its assets to generate sales and cash flow. Let's analyze the activity ratios based on the provided data:

1. Inventory Turnover:
- Royal Gold Inc's inventory turnover has fluctuated over the years, ranging from a low of 6.84 to a high of 14.91. A higher inventory turnover indicates that the company is efficiently managing its inventory by quickly selling its products. The company's inventory turnover improved in March 2020 and March 2022, suggesting better inventory management during those periods.

2. Receivables Turnover:
- The receivables turnover ratio shows how efficiently Royal Gold Inc collects on credit sales. The company's receivables turnover varied significantly, with a peak of 631.60 in December 2024 and a low of 40.82 in September 2022. A higher receivables turnover signifies that the company is effectively collecting payments from customers. There was a notable improvement in receivables turnover in December 2024 compared to the previous periods.

3. Payables Turnover:
- The payables turnover ratio reflects how quickly Royal Gold Inc pays its suppliers. The company's payables turnover ranged from 9.80 to 113.71, indicating varying payment practices over the years. A higher payables turnover suggests that the company is managing its payments efficiently. The payables turnover decreased over time, reaching its lowest point in December 2024.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently Royal Gold Inc is utilizing its working capital to generate sales. The company's working capital turnover varied significantly, with a notable spike in June 2024. A higher working capital turnover indicates effective utilization of resources to drive sales. The company experienced fluctuations in working capital turnover, with a significant improvement in June 2024 compared to the previous periods.

Overall, analyzing these activity ratios provides valuable insights into Royal Gold Inc's operational efficiency, inventory management, receivables collection, payment practices, and working capital utilization over the years. Assessing these ratios can help stakeholders understand the company's performance and make informed decisions.

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Average number of days

Based on the provided data, let's analyze the activity ratios of Royal Gold Inc:

1. Days of Inventory on Hand (DOH):
- The DOH represents the average number of days it takes for the company to sell its inventory. A lower DOH indicates efficient inventory management.
- Royal Gold Inc's DOH fluctuated over the analyzed periods, ranging from a low of 24.47 days to a high of 53.39 days. This indicates some variability in managing inventory levels.
- In the most recent period, the DOH decreased to 31.28 days, which can be interpreted as an improvement in inventory turnover efficiency compared to the previous periods.

2. Days of Sales Outstanding (DSO):
- The DSO reflects how long it takes the company to collect payments from customers. A lower DSO is generally favorable as it implies quicker conversion of sales into cash.
- Royal Gold Inc's DSO ranged from 0.58 days to 8.94 days during the analyzed periods. The company showed variability in its collection efficiency over time.
- In the last period, the DSO increased to 5.56 days, indicating a lengthened collection period compared to previous periods, which may necessitate attention to improving receivables management.

3. Number of Days of Payables:
- The number of days of payables represents the average number of days it takes for the company to pay its suppliers. A higher number of days indicates the company takes longer to settle its payables.
- Royal Gold Inc's payables days ranged from 1.03 days to 37.25 days, showing variability in the company's payment terms with suppliers.
- In the final period, the number of days of payables decreased to 27.82 days, indicating a shorter payment period compared to prior periods, which may have implications for cash flow management and relationships with suppliers.

Overall, Royal Gold Inc's activity ratios suggest fluctuations in inventory management, collection efficiency, and payment terms over the analyzed periods. Monitoring and potentially improving these ratios can enhance the company's overall operating efficiency and financial performance.

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Long-term

The fixed asset turnover ratio for Royal Gold Inc has remained constant at "—", indicating that the company is not efficiently utilizing its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio has fluctuated over the years. It started at 0.18 in December 2019, increased to 0.25 by June 30, 2021, and then gradually declined to 0.21 by December 31, 2024. This suggests that the company's ability to generate sales from its total assets improved initially but has since declined.

Overall, based on the long-term activity ratios, Royal Gold Inc seems to be facing challenges in effectively utilizing its assets to generate revenue consistently over the years. Further analysis of the company's operational efficiency and asset management practices may be warranted to address these issues.