Simulations Plus Inc (SLP)

Short-term

Turnover ratios

Based on the provided data, Simulations Plus Inc.'s activity ratios can be analyzed as follows:

1. Inventory Turnover: Unfortunately, the inventory turnover ratio data is not available for the given years, which makes it difficult to assess the efficiency of inventory management for Simulations Plus Inc.

2. Receivables Turnover: The receivables turnover ratio measures how efficiently a company is able to collect on its credit sales. From 2019 to 2022, the company's receivables turnover ratio has declined, indicating a longer time taken to collect receivables. However, in 2023, the ratio improved to 5.84, which may suggest a more efficient collection process for credit sales during that period.

3. Payables Turnover: The payables turnover ratio indicates how efficiently a company is paying its suppliers. Simulations Plus Inc.'s payables turnover ratio has consistently increased from 30.43 in 2020 to 80.76 in 2023, suggesting that the company is paying its suppliers at a faster rate over the years.

4. Working Capital Turnover: The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate sales. The ratio has generally declined from 2019 to 2022, but it saw a slight improvement in 2023. This indicates that the company's sales generation from its working capital has been less efficient in recent years, with a notable decline since 2019.

In conclusion, while the receivables turnover and payables turnover ratios show some fluctuations indicating changes in collection and payment efficiencies, the lack of data for the inventory turnover ratio and the declining trend in the working capital turnover ratio suggest potential inefficiencies in inventory management and utilizing working capital for generating sales.

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Average number of days

To analyze the activity ratios of Simulations Plus Inc., we will focus on three key ratios: days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables.

Days of inventory on hand (DOH) indicate how many days it takes for the company to sell its inventory. Unfortunately, we do not have data for this ratio for the past five years, which limits our ability to make a comparative analysis.

Days of sales outstanding (DSO) measures how long it takes for the company to collect its accounts receivable. Over the past five years, DSO has shown some fluctuation but has generally increased, which may indicate a slower collection of receivables over time. This could potentially lead to cash flow issues if not managed effectively.

The number of days of payables reveals the average number of days it takes for the company to pay its suppliers. This ratio has shown some variability, but overall, the company has been able to extend its payment period, which can be a favorable strategy for managing cash flow.

In conclusion, the DSO of Simulations Plus Inc. has been increasing over the past five years, indicating potential issues with collecting receivables, while the number of days of payables has been extended, enabling better management of cash flow. However, the absence of data for DOH limits our ability to provide a comprehensive analysis of the company's activity ratios.

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Long-term

The long-term activity ratios of Simulations Plus Inc. provide insights into the company's efficiency in utilizing its fixed and total assets to generate sales over the past five years.

Fixed asset turnover, which measures the efficiency of utilizing fixed assets to generate revenue, increased from 25.28 in 2021 to 88.79 in 2023. This signifies a substantial improvement in efficiently using fixed assets to generate sales.

On the other hand, the total asset turnover ratio, which indicates the efficiency of utilizing all assets (fixed and current) to generate sales, increased from 0.26 in 2021 to 0.32 in 2023. This suggests an overall increase in the company's ability to generate sales from its total assets.

These trends indicate that Simulations Plus Inc. has been successful in efficiently utilizing its long-term assets to generate sales, as evidenced by the significant improvements in both fixed asset turnover and total asset turnover ratios over the period from 2021 to 2023. Such improvements may signify effective investment in long-term assets and effective management of operations to generate sales.