ResMed Inc (RMD)

Short-term

Turnover ratios

The activity ratios of ResMed Inc. over the specified periods exhibit notable trends.

Inventory Turnover: The ratio declined from 2.97 times in June 2021 to 2.09 times in June 2022, and further decreased to 1.87 times in June 2023. Subsequently, there was an improvement to 2.47 times in June 2024, followed by a slight decline to 2.25 times in June 2025. This pattern indicates a decrease in inventory efficiency initially, followed by a partial recovery, though the ratio remains below the 2021 level.

Receivables Turnover: The ratio increased from 5.20 in June 2021 to 6.21 in June 2022, suggesting improved collection efficiency. It then slightly decreased to 5.99 in June 2023, continued to decrease marginally to 5.60 in June 2024, and remained relatively stable at 5.48 in June 2025. Overall, receivables management appears relatively stable post-2022, with improvements observed in the earlier period.

Payables Turnover: The ratio was steady at 9.84 in June 2021 and 9.76 in June 2022, indicating consistent accounts payable practices. It then increased significantly to 12.39 in June 2023, reflecting faster payment cycles or changes in payment policies. Subsequently, the ratio declined to 8.54 in June 2024 and further to 7.52 in June 2025, indicating a slowdown in payable turnover and possibly extended supplier payment periods over the recent years.

Working Capital Turnover: The ratio showed a decreasing trend from 4.82 in June 2021 to 2.88 in June 2022, and continued downward to 2.62 in June 2023. There was a temporary increase to 3.24 in June 2024, followed by a decline to 2.07 in June 2025. This suggests a reduction in the efficiency of working capital utilization, with some fluctuation over time.

In summary, ResMed Inc.'s activity ratios reveal variations in operational efficiency. While receivables management has stabilized after initial improvements, inventory and working capital turnover ratios have generally declined, indicating potential challenges in inventory and working capital management. The fluctuations in payables turnover highlight changes in payment strategies or supplier relationships over the analyzed period.

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Average number of days

The analysis of ResMed Inc.'s activity ratios over the periods ending June 30 from 2021 through 2025 reveals notable trends in inventory management, receivables collection, and payables payment practices.

Days of Inventory on Hand (DOH):
The DOH metric increased from approximately 122.87 days in 2021 to a peak of 195.08 days in 2023, indicating a significant elongation in inventory holding periods during this interval. Post-2023, the DOH declined to 147.84 days in 2024 but slightly increased again to 161.91 days in 2025. The elevated inventory days in 2023 suggest potential buildup of inventory, possibly due to supply chain challenges, inventory management strategies, or production planning. The subsequent decrease in 2024 suggests efforts toward inventory reduction or improved inventory turnover, although the values still remain above the 2021 levels.

Days of Sales Outstanding (DSO):
The DSO fluctuated modestly over the analyzed periods, decreasing from 70.14 days in 2021 to 58.75 days in 2022, which implies improved receivables collection efficiency in 2022. This was followed by stabilization at roughly 60.93 days in 2023, with slight increases to approximately 65.23 days in 2024 and 66.63 days in 2025. The relatively steady DSO indicates consistent credit and collection policies, with only marginal variations that suggest a stable cycle in receivables management, although slight increases in recent years may reflect changes in customer credit terms or collection practices.

Number of Days of Payables:
The days of payables rose from 37.10 days in 2021 to 37.41 days in 2022, indicating a relatively steady delay in settling payables. However, a noticeable decrease occurred in 2023 to 29.47 days, pointing to faster payments to suppliers. Subsequently, payables days increased to 42.74 days in 2024 and further to 48.55 days in 2025, illustrating a trend toward lengthening payment cycles. This extension in payable days in recent years could suggest strategic management to optimize cash flow, negotiations for extended payment terms, or shifts in supplier relationships.

Summary:
Overall, ResMed Inc. exhibited a period of inventory accumulation reaching a peak in 2023, followed by a consolidation phase. Receivables collection remained relatively stable with minor fluctuations, indicating consistent credit policies. The company’s payables management experienced variability, with a strategic or operational shift towards longer payment periods in recent years, potentially reflecting efforts to improve liquidity or supplier term negotiations. These activity ratios collectively suggest a dynamic operational environment with ongoing adjustments to optimize inventory, receivables, and payables cycles.

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Long-term

The analysis of ResMed Inc.’s long-term activity ratios indicates a positive trend in the efficiency of asset utilization over the specified period. The Fixed Asset Turnover ratio, which measures how effectively the company utilizes its fixed assets to generate sales, has shown consistent improvement. Starting from a value of 5.40 on June 30, 2021, it increased gradually each year, reaching 7.16 by June 30, 2025. This upward trajectory suggests that ResMed has been increasingly efficient in leveraging its fixed assets to produce revenue, possibly through improved operational efficiencies, asset management, or strategic asset reallocation.

In contrast, the Total Asset Turnover ratio reflects the overall efficiency in using all assets to generate sales. The ratio experienced slight fluctuations during the period, beginning at 0.68 in June 2021, rising marginally to 0.70 in June 2022, then declining to 0.63 by June 2023, before returning to 0.68 in June 2024, and remaining at that level into June 2025. These fluctuations indicate that while the overall asset utilization efficiency has been relatively stable, there have been periods of slight decline, potentially attributable to strategic investments or shifts in asset composition, which temporarily impacted overall efficiency.

Overall, the trends suggest a strengthening focus on optimizing fixed asset utilization, reflected by the consistent rise in the Fixed Asset Turnover ratio. Meanwhile, the Total Asset Turnover has maintained a relatively steady state with minor variations, indicating that while the company's ability to generate sales from its total assets remains stable, there are nuanced shifts within its asset utilization dynamics.