ResMed Inc (RMD)

Short-term

Turnover ratios

The analysis of ResMed Inc.’s activity ratios over the specified periods provides insights into the company’s operational efficiency and management of working capital.

Inventory Turnover:
The inventory turnover ratio exhibits a generally declining trend from a high of 2.97 as of June 30, 2021, to a low of 1.65 as of December 31, 2022, signaling a slowdown in inventory cycling or possible accumulation. Subsequently, there is a gradual recovery, with the ratio reaching 2.35 by December 31, 2024, and slightly increasing to 2.41 by March 2025. The ratio's fluctuations suggest periods of tighter inventory management interspersed with slower turnover phases, potentially reflecting changes in sales efficiency or inventory procurement strategies.

Receivables Turnover:
The receivables turnover ratio demonstrates consistency within a range primarily from approximately 5.13 to 6.96, indicating a stable collection efficiency. Notably, the highest value was recorded as of March 2022 at 6.96, implying effective receivables management during that period. There is a mild decline from the peak, with values around 5.13 to 6.12 in subsequent periods, reflecting relatively steady receivables collection cycles and manageable credit policies.

Payables Turnover:
This ratio illustrates fluctuation over time, with a noteworthy peak at 12.39 in June 2023, indicating a tendency to pay suppliers more quickly during that period. Conversely, during some periods, such as June 2025, the ratio drops to 7.52, implying extension of payment cycles. The overall trend suggests active management of supplier payments, balancing cash flow considerations with the need to maintain supplier relationships.

Working Capital Turnover:
This ratio displays variability, with an initial peak at 5.24 in March 2021, followed by a downward trend to approximately 2.07 by June 2025. The decline suggests a decreasing efficiency in generating sales from working capital, possibly due to increased working capital levels or declining sales productivity relative to working capital investment. Periods of stabilization occur around 2.55 to 2.82, indicating some control over working capital utilization.

Summary:
Collectively, these activity ratios reflect a company that experienced a slowdown in inventory turnover during much of 2022 and early 2023, followed by a modest recovery. Receivables management has remained relatively stable, with consistent collection efficiency. Payables management shows periods of both accelerated and extended payment cycles, indicating flexible liquidity management strategies. The decline in working capital turnover hints at potential challenges in operational efficiency or shifts in sales and working capital utilization over time. Overall, the ratios suggest a company actively managing assets and liabilities with periodic adjustments in response to operational or strategic priorities.

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Average number of days

The activity ratios of ResMed Inc., specifically Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Days of Payables (DPO), reveal insights into the company's operational efficiency and working capital management over the specified periods.

Days of Inventory on Hand (DOH):
The DOH exhibits a rising trend from approximately 138 days in September 2020 to a peak of over 221 days by December 2022, indicating a substantial increase in inventory levels relative to sales. This escalation suggests a slowdown in inventory turnover, potentially pointing to overstocking, inventory obsolescence risks, or a strategic buildup of inventory. Following this peak, there was a gradual reduction, with DOH decreasing to roughly 156 days by December 2024, signaling efforts to improve inventory management, though levels remained relatively elevated compared to initial periods. The most recent data indicates a slight uptick again to around 162.85 days in September 2024, before decreasing slightly further in subsequent quarters.

Days of Sales Outstanding (DSO):
The DSO fluctuated modestly over the analyzed period, generally remaining within a range of approximately 52 to 71 days. Notably, DSO peaked at around 71 days in December 2024, reflecting longer collection periods and potentially slower receivables turnover. Conversely, DSO reached as low as approximately 52 days in March 2022, indicative of more efficient receivables management during that time. The overall trend suggests relatively stable accounts receivable turnover, with some variability, but no significant deterioration or dramatic improvement across the span.

Number of Days of Payables (DPO):
The company's payables experience variability, with DPO generally ranging from roughly 29 to 48 days. The shortest payables period was observed around June 2023 at approximately 29 days, indicating a faster payables cycle and a potentially tighter management of payables. Conversely, DPO peaked at nearly 48 days in June 2025, implying longer credit periods with suppliers or strategic delay in payments to optimize working capital. Over time, these fluctuations reflect a dynamic approach to managing payables, balancing liquidity and supplier relationships.

Summary:
Overall, ResMed’s inventory management has faced increased holding periods leading up to 2022, followed by a gradual improvement. Receivables collection times have remained relatively stable with minor fluctuations, suggesting consistent credit policies. The payables period has shown variability, indicating flexible management strategies in settling obligations. The interplay among these ratios affects the company's working capital cycle, with a notable expansion in inventory levels that could impact liquidity and operational efficiency, whereas receivables and payables management have remained relatively stable but with signs of strategic adjustments.

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Long-term

The analysis of ResMed Inc.'s long-term activity ratios, based on the provided data, reveals insights into the company's efficiency in utilizing its fixed assets and total assets over the specified period.

Starting with the Fixed Asset Turnover ratio, which measures how effectively the company generates sales from its investment in fixed assets, the data indicates fluctuations across the periods. The ratio was highest at 7.59 on March 31, 2023, suggesting peak efficiency in utilizing its fixed assets during this time. Conversely, it reached a low of 5.40 on June 30, 2021, reflecting a period of decreased productivity or possibly increased investments in fixed assets not immediately translating into sales. Post-2021, the ratio exhibits an increasing trend, moving above 6.0 and reaching 6.70 on September 30, 2024, then slightly down to 6.44 by September 30, 2023, before rising again, indicating generally improved or stable utilization of fixed assets in recent periods.

Regarding the Total Asset Turnover ratio, which assesses overall asset utilization efficiency, the values remained relatively stable throughout the period, typically between 0.56 and 0.73. The ratio was highest at 0.73 on December 31, 2021, implying effective utilization of total assets during that quarter. The lowest point occurred at 0.56 on December 31, 2022, possibly indicating a temporary decline in asset efficiency, possibly due to increased asset base or reduced sales. The subsequent periods show a gradual recovery and stability, with ratios fluctuating modestly around 0.63 to 0.69, reflecting consistent overall asset utilization.

In summary, ResMed Inc. experienced variability in its fixed asset efficiency over the observed periods, with notable improvements after mid-2021, potentially reflecting strategic asset investments or operational efficiencies. The total asset turnover indicates a relatively stable performance with minor fluctuations, suggesting consistent management of overall asset utilization. The general trend points toward a company maintaining steady efficiency in its long-term activity ratios, with periods of peak performance interspersed with temporary downturns.