Sotera Health Co (SHC)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 9.77 | 11.91 | 10.63 | 9.58 | 12.03 | 11.95 | 10.89 | 9.28 | 7.60 |
| Receivables turnover | 6.65 | 6.58 | 6.24 | 6.97 | 7.38 | 6.99 | 6.81 | 7.60 | 7.86 |
| Payables turnover | 6.65 | 7.91 | 8.05 | 7.23 | 6.02 | 7.31 | 6.62 | 7.68 | 5.67 |
| Working capital turnover | 3.21 | 3.10 | 2.82 | 3.05 | — | 3.54 | 3.78 | 4.20 | 5.04 |
Sotera Health Co's activity ratios provide insights into how efficiently the company is managing its resources to generate sales and collect payments.
1. Inventory Turnover:
- Sotera Health Co's inventory turnover has been relatively stable over the quarters, ranging between 9.58 and 12.03. This indicates that the company is effectively managing its inventory levels and converting them into sales. A higher turnover ratio suggests that the company is efficiently selling its inventory.
2. Receivables Turnover:
- The receivables turnover ratio has been consistent, with values varying around 6.42 to 7.94. This indicates that the company is collecting its accounts receivable in a timely manner. A higher turnover ratio suggests that the company is efficiently collecting payments from its customers.
3. Payables Turnover:
- Sotera Health Co's payables turnover ratio has fluctuated, with values ranging from 6.02 to 8.05. A higher payables turnover ratio indicates that the company is paying its suppliers more quickly. This could be beneficial as it may help in maintaining good relationships with suppliers and potentially negotiate better terms.
4. Working Capital Turnover:
- The working capital turnover has shown variations over the quarters, with values ranging from 2.82 to 4.20. This ratio measures how effectively the company is utilizing its working capital to generate sales. A higher turnover ratio suggests that the company is efficiently using its working capital to support its operations and sales activities.
Overall, the activity ratios indicate that Sotera Health Co is managing its inventory, receivables, payables, and working capital efficiently to support its operations and sales activities. continued monitoring of these ratios will be important to ensure continued efficiency in managing the company's resources.
Average number of days
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 37.35 | 30.64 | 34.35 | 38.09 | 30.35 | 30.53 | 33.50 | 39.35 | 48.00 |
| Days of sales outstanding (DSO) | days | 54.87 | 55.51 | 58.47 | 52.37 | 49.44 | 52.20 | 53.62 | 48.01 | 46.43 |
| Number of days of payables | days | 54.92 | 46.15 | 45.35 | 50.48 | 60.58 | 49.91 | 55.15 | 47.55 | 64.43 |
Based on the activity ratios provided for Sotera Health Co, we can analyze the efficiency of the company's operations:
1. Days of Inventory on Hand (DOH): This ratio indicates the number of days it takes for the company to sell its inventory. The trend shows some fluctuation throughout the quarters, with Q1 and Q4 of 2023 and Q1 of 2022 having higher DOH values, indicating a longer time to sell inventory. This may suggest potential issues with inventory management efficiency during those periods.
2. Days of Sales Outstanding (DSO): DSO measures the average number of days it takes for the company to collect payments from its customers. The trend shows relatively consistent DSO values across quarters, with Q2 and Q3 of 2023 having slightly higher values. This indicates that the company may be taking a bit longer to collect payments from customers during those periods.
3. Number of Days of Payables: This ratio reflects the average number of days the company takes to pay its suppliers. The trend shows fluctuations in the number of days of payables, with Q4 of 2022 and Q1 of 2023 having higher values. A higher number of days of payables may suggest that the company is taking longer to pay its suppliers during those quarters.
Overall, the company should focus on optimizing its inventory management, improving collection processes from customers, and ensuring timely payments to suppliers to enhance its operational efficiency and liquidity position. Tracking these activity ratios over time can help identify trends and areas for improvement in the company's working capital management.
Long-term
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|---|---|---|
| Fixed asset turnover | 1.11 | 1.12 | 1.14 | 1.21 | 1.30 | 1.41 | 1.39 | 1.43 | 1.43 |
| Total asset turnover | 0.34 | 0.33 | 0.32 | 0.29 | 0.32 | 0.35 | 0.34 | 0.34 | 0.33 |
The fixed asset turnover ratio for Sotera Health Co has been gradually decreasing from Q1 2023 to Q4 2023, indicating that the company is generating slightly less revenue from its fixed assets over time. This may suggest either a decrease in sales relative to fixed assets or an increase in the value of fixed assets without a proportional increase in revenue generation.
On the other hand, the total asset turnover ratio has also seen a downward trend over the quarters, indicating that the company's ability to generate sales from its total assets has been declining. This could signal inefficiencies in asset utilization or a decrease in sales relative to total assets held by the company.
Overall, these long-term activity ratios suggest that Sotera Health Co may be facing challenges in efficiently utilizing its assets to generate revenue. Management should closely monitor these ratios and assess strategies to improve asset turnover efficiency in order to enhance profitability and sustainability in the long term.